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ISM chart and excerpts below by permission from the Institute for Supply Management® ISM®

If Fed chair Jerome Powell was looking for another excuse to not hike rates in March, the January 2024 Services ISM^® Report On Business^® provides a reason.

Economic activity in the services sector expanded in January for the 13th consecutive month as the Services PMI^® registered 53.4 percent, say the nation’s purchasing and supply executives in the latest Services ISM^® Report On Business^®. The sector has grown in 43 of the last 44 months, with the lone contraction in December 2022.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: “The overall growth rate increase in January is attributable to faster growth of the New Orders, Employment, and Supplier Deliveries indexes. The majority of respondents indicate that business is steady. ”

Optimistic About Rate Cuts, Cautious About Inflation

“[Businesses] are optimistic about the economy due to the potential impact of interest rate cuts; however, they are cautious due to inflation, associated cost pressures and ongoing geopolitical conflicts,” said Nieves.

Optimistic about rate cuts but worried about inflation and geopolitical conflicts is very similar to what Jerome Powell said in an interview with 60 minutes on Sunday.

Powell also told 60 Minutes, the “US Fiscal Path is Unsustainable”, and geopolitical risk was a top concern.

15 Key Powell Takeaways

For discussion and synopsis of the interview please see my 15 Key Takeaways From the 60 Minutes Interview.

Point number 5 was “people are experiencing high prices” and the overall price level will not come down.

Point number 11 was “Powell said geopolitical risk are greatest threat to the world economy.”

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