Just as the market was starting to flag a bit on the NFP number here comes services ISM and blows out the bears’ teeth.
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. “The NMI registered 56.8 percent in January, 3.8 percentage points higher than the seasonally adjusted 53 percent registered in December, and indicating continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 59.5 percent, which is 3.6 percentage points higher than the seasonally adjusted 55.9 percent reported in December, reflecting growth for the 30th consecutive month. The New Orders Index increased by 4.8 percentage points to 59.4 percent, and the Employment Index increased by 7.6 percentage points to 57.4 percent, indicating substantial growth in employment after one month of contraction. The Prices Index increased 1.5 percentage points to 63.5 percent, indicating prices increased at a slightly faster rate in January when compared to December. According to the NMI, 12 non-manufacturing industries reported growth in January. Respondents’ comments are mostly positive about business conditions. There is concern about cost pressures and the sustainability of the recent spike in activity.”
I’m surprised by this number – particularly the employment index, which is not congruent with the household survey. In addition the prices number is trouble.
But it is what it is, and the market loved it (as expected with a beat of this type), so for today the right thing to do is sit back and enjoy the ride.
Reality will intrude when you look at the size of government and its fiscal demands given the employment participation rate, but today is not the day — the junkie got his fix, the needle went in and was loaded with heroin, and he’s up and dancing on both the TV and in the markets.
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