- by New Deal democrat
Probably the most important economic news this entire week was this morning’s ISM services report. Services are about 75% of the economy, and this report was for November, which means it is the most wide-ranging and current datapoint we have at the moment.
And the news on this front was almost all good. The headline number (blue in the graph below) improved to 52.6 from last month’s 52.4. Employment was less bad, improving to 48.9 from 48.2. Prices paid decelerated (a good thing) from 70.0 to 65.4. The only (slight) disappointment was that new orders (gray) were less positive at 52.9 vs. last month’s strong 56.2 [note: all graphs via TradingEconomics.com]:
My short term economic forecast gives 75% weight to this metric (gray) and 25% to the manufacturing survey (blue), and also averages over 3 months to cut down on noise. For the headline number, the three month economically weighted average was 51.0:
For the more leading new orders metric, the economically weighted three month average was 52.0:
Needless to say, both of these were expansionary if weakly so, but with evidence of a slightly improving near term forecast.
The retreat in the prices paid metric was particularly good news in comparison with preceding months:
But as with the manufacturing survey, the regional Fed surveys, and this morning’s ADP report, the bad news (even if “less bad”) is that employment appears to be contracting:
For the working and middle class as a whole, the question is whether payroll gains via wages more than make up for th apparent slight loss in the number of jobs. Unfortunately, for that at the moment we only have shadows on the wall.
