Solid Report for the ISM Non-Manufacturing Index

Wells Fargo Research Team Wells Fargo

The ISM non-manufacturing index rose 1.1 point to 55.0 in December. This report should calm fears of weakness in the ISM manufacturing index spilling into the service sector.

Rebound in Current Activity

Current conditions rebounded in December as the largest gain came from the business activity sub-index, up 5.6 points. That serves as the latest indication that activity in the service sector continues to hold up as manufacturing activity has floundered.

Other purchasing manager indices—Markit and regional Fed— were consistent with the December gain in the ISM nonmanufacturing index, confirming stabilization within the sector.

New Orders Lower, but Growth Likely to Continue

The employment components of the ISM surveys act as a good indication for near-term payroll gains. The non-man employment component declined modestly in December, but at 55.2 suggests a solid read for nonfarm payrolls—released Friday.

The forward-looking new orders component fell 2.2 points—the largest decline of any sub-index. New orders remain comfortably in expansion territory, suggesting continued growth in the sector

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Wells Fargo Research Team

Wells Fargo

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