ISM Non-Manufacturing Healthy, Prices Paid Falls Again

- ISM Non-Manufacturing for January rose to 59.0 versus estimates of 57.0 and a downwardly revised 56.7 in December.

BOTTOM LINE: Growth at US service industries accelerated last month as companies trimmed excess inventories, a sign that increased consumer spending is bolstering the economic expansion, Bloomberg reported. ISM non-manufacturing is a gauge of industries that make up almost 90% of the economy. The Prices Paid component declined to 55.2 versus 59.7 the prior month. The employment component of the index fell to 51.7 from 53.2 in December. The inventories component fell to 47, the lowest since June 2003, versus 53.5 in December. The average price of a gallon of gas has declined 29% from last year’s peak of $3.04 to $2.23 a gallon last month. I continue to believe consumer spending will remain healthy and likely accelerate over the intermediate-term as wage continue to meaningfully outpace inflation, unemployment stays low, gas prices fall further, stocks rise, sentiment improves, housing stabilizes at relatively high levels, more seasonal weather arrives and interest rates remain low.