ISM services higher but employment lags, go figure

The Dec ISM services index rose to 57.1 from 55, was 1.4 pts above expectations and the best since May ’06. Business Activity was up 6.5 pts to the most since Aug ’05. Interestingly and in contrast to the robust ADP report, the Employment component fell 2.2 pts to just above 50 at 50.5, a 3 month low. This follows a decline in the Employment part of the ISM mfr’g index. Thus, Friday’s Payroll figure becomes even more of a focus to reconcile things (even though it will be revised multiple times hence). New Orders spiked more than 5 pts to the highest since Aug ’05 but Backlogs fell 3 pts to 48.5. Export Orders fell 3.5 pts. Prices Paid, coincident with the inflation theme, rose almost 7 pts to the highest since Sept ’08. Of 18 industries surveyed, 14 saw growth and while “Respondents’ comments vary by company and industry…overall are mostly positive about business conditions.”

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