Ismnon Manufacturing December 2008
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Sam Bullard, Economist
[email protected] ● 704-383-7372 January 06, 2009
Service Sector Activity Surprises in December The Institute for Supply Management’s non-manufacturing index beat expectations, rising to 40.6 in December from the record low of 37.3 posted in November. Most subcomponents rebounded from their record low, but weakness in the service sector persists as we enter 2009. Activity will remain depressed with little relief in sight. Activity Rebounds from Record Lows
Outlook Remains Challenged for 2009
• While most subcomponents rebounded from record lows, the prices paid index and the imports index fell further on the month. • The business activity index remained depressed, confirming our expectation for a sharp economic contraction in the final quarter of 2008.
• The new orders index posted a moderate increase in December but at these levels the index suggests activity in the service sector will remain challenged for most of 2009. • Even though the employment index rebounded last month, the December level is consistent with our -550K call for December nonfarm employment to be released this Friday.
ISM Non-Manufacturing Composite Index (NMI) Index
65
ISM Non-Manufacturing Index 65
New Orders Index
75
75
70
70
65
65
60
60
55
55
50
50
45
45
40
40
60
60
55
55
50
50
45
45
40
40 35
ISM Non-Manufacturing Composite: Dec @ 40.6 12-M Mov. Avg.: Dec @ 47.8
35 98
99
00
01
02
03
04
05
35 New Orders SA: Dec @ 39.9
35 06
07
30
08
30 98
99
00
ISM Non-Manufacturing Index
01
02
03
04
05
06
07
08
ISM Non-Manufacturing Index
Business Activity Index
Employment Index
70
65
65
65
60
60
60
60
55
55
55
55 50
50
50
50 45
45
45
45
40
40
40
40
35
35
35
30
30
70
35
ISM Non-Manufacturing Index SA: Dec @ 39.6 12-Month Moving Average: Dec @ 47.5
Employment Index SA: Dec @ 34.7
30 98
99
00
01
02
03
04
05
65
06
07
08
30 98
99
00
01
02
03
04
05
06
07
08
Wachovia Corporation Economics Group publications are distributed by Wachovia Corporation directly and through subsidiaries including, but not limited to, Wachovia Capital Markets, LLC, Wachovia Securities, LLC and Wachovia Securities International Limited. The information and opinions herein are for general information use only. Wachovia does not guarantee their accuracy or completeness, nor does Wachovia assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. © 2009Wachovia Corp.
[email protected] ● 704-383-7372 January 06, 2009
Service Sector Activity Surprises in December The Institute for Supply Management’s non-manufacturing index beat expectations, rising to 40.6 in December from the record low of 37.3 posted in November. Most subcomponents rebounded from their record low, but weakness in the service sector persists as we enter 2009. Activity will remain depressed with little relief in sight. Activity Rebounds from Record Lows
Outlook Remains Challenged for 2009
• While most subcomponents rebounded from record lows, the prices paid index and the imports index fell further on the month. • The business activity index remained depressed, confirming our expectation for a sharp economic contraction in the final quarter of 2008.
• The new orders index posted a moderate increase in December but at these levels the index suggests activity in the service sector will remain challenged for most of 2009. • Even though the employment index rebounded last month, the December level is consistent with our -550K call for December nonfarm employment to be released this Friday.
ISM Non-Manufacturing Composite Index (NMI) Index
65
ISM Non-Manufacturing Index 65
New Orders Index
75
75
70
70
65
65
60
60
55
55
50
50
45
45
40
40
60
60
55
55
50
50
45
45
40
40 35
ISM Non-Manufacturing Composite: Dec @ 40.6 12-M Mov. Avg.: Dec @ 47.8
35 98
99
00
01
02
03
04
05
35 New Orders SA: Dec @ 39.9
35 06
07
30
08
30 98
99
00
ISM Non-Manufacturing Index
01
02
03
04
05
06
07
08
ISM Non-Manufacturing Index
Business Activity Index
Employment Index
70
65
65
65
60
60
60
60
55
55
55
55 50
50
50
50 45
45
45
45
40
40
40
40
35
35
35
30
30
70
35
ISM Non-Manufacturing Index SA: Dec @ 39.6 12-Month Moving Average: Dec @ 47.5
Employment Index SA: Dec @ 34.7
30 98
99
00
01
02
03
04
05
65
06
07
08
30 98
99
00
01
02
03
04
05
06
07
08
Wachovia Corporation Economics Group publications are distributed by Wachovia Corporation directly and through subsidiaries including, but not limited to, Wachovia Capital Markets, LLC, Wachovia Securities, LLC and Wachovia Securities International Limited. The information and opinions herein are for general information use only. Wachovia does not guarantee their accuracy or completeness, nor does Wachovia assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. © 2009Wachovia Corp.
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