ISM Non-Manufacturing: 53.0%, Down from 53.9% vs. Expected 54.8%; Orders Measures Are Both in Contraction
The NMI® registered 53 percent in December, 0.9 percentage point lower than November’s reading of 53.9 percent. This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 55.2 percent, which is 0.3 percentage point lower than the 55.5 percent reported in November, reflecting growth for the 53rd consecutive month, but at a slightly slower rate. The New Orders Index contracted after 52 consecutive months of growth for the first time since July 2009, when it registered 48 percent. The index decreased significantly by 7 percentage points to 49.4 percent, and the Employment Index increased 3.3 percentage points to 55.8 percent, indicating growth in employment for the 17th consecutive month and at a faster rate. The Prices Index increased 2.9 percentage points to 55.1 percent, indicating prices increased at a faster rate in December when compared to November. According to the NMI®, eight non-manufacturing industries reported growth in December. Despite the substantial decrease in the New Orders Index, respondents’ comments predominately reflect that business conditions are stable.”
Business Insider expected 54.8%.
This report elements affecting GDP were not strong.
The contraction in New Orders, though slight, is troubling, especially when combined with the further contraction in Backlog of Orders (from 49.0% to 46%.0%). But Production barely changed. Although we always have to remember that this ISM’s reports are sentiment surveys and not hard measurement tools, that situation clearly isn’t sustainable.
We’ll take the overall expansionary, but this report has big red flags in it for the early months of 2014.