KEY DATA: ISM (NonMan.): -3.6 points; Orders: -6.2 points; Employment: +0.7 point/ ADP: +129.000; Manufacturing:  -2,000/ HWOL: -1.6%

IN A NUTSHELL:  “There are more signs the economy is slowing.”

WHAT IT MEANS:  If there is one consistency in the data, it is that they are inconsistent.  We have gotten some good numbers this week, some iffy numbers and some disturbing ones.  Today’s data were somewhat weaker than expected.  Let’s start with the Institute for Supply Management’s NonManufacturing Index.  It came in lower than forecast.  That said, the level is still pretty solid, or at least points to continued moderate growth.  The details were a bit odd.  The overall index fell solidly, business activity and orders crashed, but backlogs and hiring improved.  Those results tend not to say the same thing.  What they seem to be implying is that there is a easing in activity but it is not spread across all segments of the economy.  Indeed, the manufacturing supply managers indicted that conditions were improving.  Conclusion:  Conditions are a lot more mixed than they had been.

With Friday being the day of the March employment report, today’s ADP estimate of private sector job gains was looked toward to provide some insight into the extent of the bounce from the February modest 20,000 payroll rise.  Well, it could be somewhat less than hoped for.  There were some concerns that popped up in this report.  First, the small business segment, which had been hiring quite solidly, appears to be shutting things down.  It is unclear whether that is due to softer demand or a lack of qualified applicants, but regardless, that is a critical component of job growth and right now it is lacking.  The second is the sharp slowing in manufacturing payroll gains.  I don’t know what to make of that as the ISM manufacturing survey pointed to a rebound in manufacturing employment.  I guess we will have to wait a couple of days to find out.

On the jobs front, the Conference Board’s Help Wanted OnLine index fell in March.  This index has become somewhat more volatile than usual and it may be due to temporary factors such as the government shutdown and the weather.  Of course, it could be due to uncertainty over the direction of growth, which would not be a good thing.  But just as the ISM nonmanufacturing index still points to solid growth despite its decline, the HWOL index decline only means that job growth should be good not great.MARKETS AND FED POLICY IMPLICATIONS:So, where is the economy going?  Good question.  The yin and yang of the numbers makes it clear that the year of tax-induced solid growth is over.  But growth is still decent.  Indeed, yesterday’s surprising report that vehicle sales popped in March provides some hope that the slowdown is bottoming.  My first quarter GDP number has been 1.8% for a few months now and I am sticking with that.  But I also expect the second quarter to bounce back up to around 2.5%.  Taken together, that means first half growth will likely come in at about 2.25%, which is where I have growth for the year.  Is that bad?  Not at all – it is trend growth or maybe even a touch higher.It’s just the expectations we will get 3% growth for the next decade were overblown as we will probably see that level (or close to it), for only one year.  That is not even good for government work, but the administration’s economists at the Office of Management and Budget tend to be politically directed.  Instead, we are seeing something closer to the nonpartisan Congressional Budget Office economists’ forecasts, which mirrored the private sector forecasts.  As for Friday, I think we will be in the 160,000 to 175,000-range.  That would put the three month average also in that range, which is where it should be.  That is not so strong or weak that the ad-libbers at the Fed will have to change course again, but it is solid enough to push back at those who want to see rates cut.