From the Institute For Supply Management:
Business activity in the non-manufacturing sector increased at a slower rate in December 2006, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
"Non-manufacturing business activity increased for the 45th consecutive month in December," Nieves said. He added, "Business Activity increased at a slower rate in December than in November. Employment, Inventory, Exports and Imports all increased at a faster rate. The Prices Index increased 3.5 percentage points this month to 59.1 percent. Nine of 18 non-manufacturing industries reported increased activity in December. Members' comments in December are generally positive concerning current business conditions. The overall indication in December is continued economic growth in the non-manufacturing sector, but at a slower pace than in November."
Here are the comments from the comments section:
* "Business activity remains strong and is on the upturn." (Finance & Insurance)
* "Housing sales slowing, affecting all areas of business." (Construction)
* "The economy is starting to slow a little bit." (Professional, Scientific & Technical Services)
* "Market remains stable." (Information)
* "Business is steady, some seasonal increases." (Wholesale Trade)
Let's look at these comments in a bit more detail. Over the last month three sub-prime mortgage lenders have either declared bankruptcy or stopped accepting new applications. But these problems have not bled over into other financial services -- at least not yet. In addition, construction is still slowing but with no bleed-through to other areas of the economy. I have to admit, the lack of an impact by the housing slowdown on non-construction economic areas is very perplexing right now.
The overall business activity index has fluctuated between 57.1 and 58.9 over the last three months. That indicates expansion. This month's slight downturn could easily be considered statistical noise.
The prices index has increased for the last three months. This is in-line with the PPI information. This may be another inflation indicator the Fed is worried about.
Imports increased each month for the last 4 months. That's interesting.
That's about it. This report looks pretty good.