US: ISM Non-Manufacturing employment component suggests a solid read for NFP – Wells Fargo

The US ISM Non-manufacturing PMI index rose to 55.0 in December, above expectations. This report should calm fears of weakness in the ISM manufacturing index spilling into the service sector, argued analysts at Wells Fargo. 

Key Quotes: 

“Current conditions rebounded in December as the largest gain came from the business activity sub-index, up 5.6 points. That serves as the latest indication that activity in the service sector continues to hold up as manufacturing activity has floundered.”

“The employment components of the ISM surveys act as a good indication for near-term payroll gains. The non-man employment component declined modestly in December, but at 55.2 suggests a solid read for nonfarm payrolls—released Friday.”

“The forward-looking new orders component fell 2.2 points—the largest decline of any sub-index. New orders remain comfortably in expansion territory, suggesting continued growth in the sector.”