Economists missed the mark badly in estimating ISM services which plunged into contraction.

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

Please consider the December 2022 Services ISM^® Report On Business^®

Economic activity in the services sector contracted in December after 30 consecutive months of growth.

In December, the Services PMI^® registered 49.6 percent, a 6.9-percentage point decrease compared to the November reading of 56.5 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 50.1 percent, over time, generally indicates an expansion of the overall economy. Therefore, the December Services PMI^® indicates the overall economy is contracting after a preceding period of 30 months of growth. Nieves says, “The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for December (49.6 percent) corresponds to a 0.2-percent decrease in real gross domestic product (GDP) on an annualized basis.”

Missing the Mark

Bloomberg Econoday had this to say ahead of the report: "The ISM services index has been surprisingly solid month after month, beating expectations once again in November with a 56.5 score. Econoday's consensus for December is for another month of expansion at 55.0."

The range of estimates was 53.0 to 56.0 with the actual at 49.6

ISM Manufacturing Now Signals Recession for the First Time in 30 Months

On January 4 I noted The ISM manufacturing index contracts for the 2nd consecutive month. It's the lowest reading since May 2020.

Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further

On January 3, I noted Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further

Anemic Jobs Report

If you thought the December jobs report was strong, think again.

For discussion, please see Stock Market Cheers Weak Job Report, But Big Picture Still Looks Grim

Weakness is accelerating in every corner. 

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