- ISM Non-Manufacturing for January fell to 44.6 versus estimates of 52.5 and a reading of 53.2 in December.
BOTTOM LINE: US service industries unexpectedly shrank in January, Bloomberg reported. The New Orders component fell to 43.5 versus 53.9 the prior month. New Export Orders rose to 52.0 from 50.0 in November. The Employment component fell to 43.9 from 51.8 the prior month. The Prices Paid component fell to 70.7 from 71.5 in December. Weekly retails sales rose a sluggish .5% this week. According to Intrade.com, the odds of a recession beginning this year are still down from 77.5% a couple of weeks ago to 68% today, notwithstanding this report. As well, the US dollar index is rising substantially. Fed fund futures now imply a 100% chance for another 50 basis point rate cut at the March 18 meeting, which is up from a 68.0% chance yesterday. I suspect this number will see a substantial snapback next month. I still expect overall US growth to accelerate meaningfully as the year progresses.
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