Just a brief data note here. We got the ADP employment report this morning as well as the ISM non-manufacturing. Both were better than expected with the ADP coming in at 162K vs 140K expectations and the ISM non-manufacturing coming in at a healthy 55.7 vs expectations of 53.7. I think the comments in the ISM report nicely sum up the current economic environment:
- “Business remains steady — optimistic for good fourth quarter.” (Information)
- “Drought is putting pressure on food cost; tourism slowdown over the summer.” (Arts, Entertainment & Recreation)
- “Things feel like the economy is moving. More new small business; unemployment declining; stock market up.” (Health Care & Social Assistance)
- “Economic outlook is improving, but company is putting a major effort into more cost reductions and reorganization, resulting in more collaboration between procurement and our internal customers.” (Professional, Scientific & Technical Services)
- “The general slowdown which began in March showed some reversal in August.” (Wholesale Trade)
Still in the muddle through phase we’ve been expecting, but not contracting. It’s not enough to substantially reduce unemployment, but it’s enough to keep the economy growing marginally.