Analysts at TD Securities note that the US non-manufacturing ISM index rose to 55.0 in December from 53.9 in November, above the 54.5 consensus and a fairly healthy level.
Key Quotes
“The rise was in contrast to the drop in the manufacturing index (to 47.2 from 48.1). It was probably helped by the initial reaction to the U.S.-China trade deal, but the data suggest still-solid overall growth, even with weakness in manufacturing; manufacturing accounts for just 11% of GDP.”
“In other reports, the trade deficit and factory orders were down in November, as had already been signaled in preliminary partial data. The deficit fell to $43.1B, near the $43.7B consensus, from $46.9B. It is down sharply from $52.5B, on average, in Q3, so trade is on track to add significantly to Q4 GDP growth.”
“Much of the strength is likely to be offset by a drag from inventories, however, due to imports plunging after tariffs were raised in September.”
“Factory orders fell 0.7%; near the -0.8% consensus. The decline was led by a previously reported drop in volatile aircraft orders. Core capex orders were up 0.2%, revised from up 0.1%.”
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