US Factory Orders Tumble But ISM Confirms Service Sector Rebound

Following ISM’s ugly narrative-busting manufacturing data and Markit’s rebound-supporting non-manufacturing print, ISM Services is set to break the tie with expectations of a modest rebound in December, and it did, rising from 53.9 to 55.0 (above the 54.5 expectations).

A rebound in sales and production lifted US Services’ activity to a four-month high in December, indicating the broader economy remains stable in the face of further deterioration in manufacturing.

Source: Bloomberg

And so for once, both ISM and Markit are in agreement – Manufacturing is weaker and Non-Manufacturing stronger in December…

Source: Bloomberg

A very different picture between the two sectors of the economy…

Source: Bloomberg

And this ‘soft’ survey data is confirmed by ‘hard’ data as US Factory Orders declined 0.7% MoM in November, down annually for the 4th straight month…

Source: Bloomberg

However, while the modest rebound MoM will be touted as significant, Bloomberg notes that the ISM’s non-manufacturing index averaged 55.5 for all of 2019, the lowest in three years and down from 58.9 in 2018.

The annual average for the group’s factory gauge was the weakest in a decade.