{"id":1431,"date":"2019-01-07T14:19:03","date_gmt":"2019-01-07T19:19:03","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=1431"},"modified":"2019-01-07T14:19:03","modified_gmt":"2019-01-07T19:19:03","slug":"december-nonmanufacturing-activity-and-employment-trends","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1431","title":{"rendered":"December NonManufacturing Activity and Employment Trends"},"content":{"rendered":"

KEY DATA:<\/u><\/strong>ISM (NonManufacturing): -3.1 points, Activity: -5.3 points; Orders: +0.2 points\/ Employment Trends: +1.38 points<\/p>\n

IN A NUTSHELL:<\/u><\/strong>\u00c2\u00a0\u00e2\u20ac\u0153Growth may be moderating but it is hardly slow.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/u><\/strong>\u00c2\u00a0The government\u00e2\u20ac\u2122s data mills may not be churning out all the numbers they usually do, shutdowns have a tendency to do that, but the private sector is still providing some important data.\u00c2\u00a0 The Institute for Supply Management\u00e2\u20ac\u2122s NonManufacturing index dropped in December<\/em><\/strong>, but there really is nothing to be alarmed about.\u00c2\u00a0 The level of the index is still fairly high.\u00c2\u00a0While overall activity in the services and construction sectors has eased, it is not falling apart, as can be seen by the continued strong rise in new orders. <\/em><\/strong>\u00c2\u00a0It is hard to make the argument that the economy is about to fall off the cliff if demand is accelerating.\u00c2\u00a0 Firms are still hiring solidly, but not robustly, which is also nothing to complain about.\u00c2\u00a0 There was just one warning sign in the report: Backlogs have pretty much stopped building.\u00c2\u00a0 But they are not falling, so the warning is more yellow than red.\u00c2\u00a0 <\/em><\/strong><\/p>\n

Was the huge December jobs number an aberration or a sign of things to come?\u00c2\u00a0 Well, it is doubtful we will be seeing payroll increases above 300,000 many times, if at all, this year, but we could get some above 200,000.\u00c2\u00a0 The Conference Board\u00e2\u20ac\u2122s Employment Trends Index popped back up in December after declining in November.<\/em><\/strong>\u00c2\u00a0 It is pointing to continued solid job gains.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/u><\/strong>\u00c2\u00a0While the markets crashed and burned, economists spent their time trying to explain that a recession was not likely to start for another year or more. \u00c2\u00a0Of course, investors didn\u00e2\u20ac\u2122t believe that<\/em><\/strong>, otherwise why were they selling their stocks?\u00c2\u00a0Well, the selling was due to, well, you tell me and we both will know.\u00c2\u00a0 There is a moderation in growth occurring,<\/em><\/strong>but only those who think unsustainable growth is actually sustainable didn\u00e2\u20ac\u2122t understand that.\u00c2\u00a0 Solid but not robust growth is just fine.<\/em><\/strong>\u00c2\u00a0And the reaction to Fed Chair Powell\u00e2\u20ac\u2122s comments that the Fed could change course was fascinating.\u00c2\u00a0 Keep in mind; he didn\u00e2\u20ac\u2122t say to which direction the Fed would tack.\u00c2\u00a0 <\/em><\/strong>The markets took his words to mean the Fed might not raise rates this year or hike only one time.\u00c2\u00a0 But if the economy stays solid and inflation rises, does anyone think the Fed will not hike rates more than most investors now believe?\u00c2\u00a0 That would be changing direction, but in the opposite way that the markets now think.\u00c2\u00a0 <\/em><\/strong>You see, Fed Chairs rarely say anything specific. <\/em><\/strong>\u00c2\u00a0They leave their options open<\/em><\/strong>and if you read Mr. Powell\u00e2\u20ac\u2122s comments, they said nothing specific about raising, lowering or keeping rates constant.\u00c2\u00a0 As far as the balance sheet reductions go, the Fed has never done this before, so it has no idea about the impact the changes will have on the economy.\u00c2\u00a0 Saying they are flexible about changes is hardly news.\u00c2\u00a0 The members like schedules but have always been willing to deviate from them.\u00c2\u00a0 But hey, investors wanted to hear something and even if that something wasn\u00e2\u20ac\u2122t actually said, they will believe they heard it.<\/em><\/strong>\u00c2\u00a0 So, if the Fed doesn\u00e2\u20ac\u2122t do what the markets want it to do because they thought the Fed had said it would do that, investors have only themselves to blame \u00e2\u20ac\u201c which of course they will not.\u00c2\u00a0 For me, the economy is growing above trend, which points to at least two and possibly three moves this year.\u00c2\u00a0 <\/em><\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:ISM (NonManufacturing): -3.1 points, Activity: -5.3 points; Orders: +0.2 points\/ Employment Trends: +1.38 points IN A NUTSHELL:\u00c2\u00a0\u00e2\u20ac\u0153Growth may be moderating but it is hardly slow.\u00e2\u20ac\u009d WHAT IT MEANS:\u00c2\u00a0The government\u00e2\u20ac\u2122s data mills may not be churning out all the numbers they usually do, shutdowns have a tendency to do that, but the private sector is … Continue reading December NonManufacturing Activity and Employment Trends<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1431","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1431","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1431"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1431\/revisions"}],"predecessor-version":[{"id":1432,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1431\/revisions\/1432"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1431"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1431"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1431"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}