ISM Report Shows Little Optimism

I was surprised to see an item on CNN reporting that the Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 40.6 from 37.3. The headline was how the service sector was improving. However, when I looked at the detail of the ISM’s Report of Business the overall picture is somewhat less optimistic.

Only one industry showed an increase in business, Retail, which is not surprising with the recent holiday season. Four industries showed no change and 13 were in decline. The ISM’s New Orders Index contracted in December for the third consecutive month and employment activity in the non-manufacturing sector contracted in December for the 11th time in the last 12 months.