Economic activity in the non-manufacturing sector grew in January for the 48th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
… The NMI® registered 54 percent in January, 1 percentage point higher than the seasonally adjusted reading of 53 percent registered in December. The Non-Manufacturing Business Activity Index increased to 56.3 percent, which is 2 percentage points higher than the seasonally adjusted reading of 54.3 percent reported in December, reflecting growth for the 54th consecutive month and at a faster rate. The New Orders Index increased to 50.9 percent, 0.5 percentage point higher than the seasonally adjusted reading of 50.4 registered in December. The Employment Index increased 0.8 percentage point to 56.4 percent from the December seasonally adjusted reading of 55.6 percent and indicates growth in employment for the 25th consecutive month and at a faster rate. The Prices Index increased 2.4 percentage points from the December seasonally adjusted reading of 54.7 percent to 57.1 percent, indicating prices increased at a faster rate in January when compared to December. According to the NMI®, eleven non-manufacturing industries reported growth in January. The majority of respondents’ comments reflect an improvement in business conditions. Some of the respondents indicate that weather conditions have impacted their business. There remains a bit of uncertainty about the overall economy for some of the survey respondents; however, the majority feel positive about continued economic growth.”
This is a decent if not thrilling result which is a relief after Monday’s Manufacturing Index come-down.
Two of the three primary GDP drivers are in the excerpted paragraph above, and they both advanced, though New Orders are still barely above the expansion/contraction breakeven of 50%. The third driver, Orders Backlong, improved from 46.0% to 49.0%, but is still in slight contraction.
UPDATE: Zero Hedge —
Today we saw how bad weather is used to explain away the bad January numbers (ADP), but when the number is better than expected, the weather spin is ignored and it is a “reflection of the stronger economy” as was the case with the just released Services ISM number – and that is how you pick and choose the components that fit your narrative… and the tapering trend can continue.
Stocks aren’t particularly pleased with today’s ADP and ISM reports, especially the NASDAQ, which was down over 1% as of 10:35 a.m.