Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The ISM Non-Manufacturing Index Declined to 56.5 in February
Posted Under: Data Watch • Employment • Inflation • ISM Non-Manufacturing • COVID-19
Supporting Image for Blog Post

Implications:  The service sector continued to expand rapidly in February, albeit at a slightly slower pace, as rising inflation, labor shortages, and supply chain restraints continue to prevent activity from expanding even more quickly. Gains were broad-based, with fourteen of eighteen industries reporting growth. However, most major components moved lower, with both the new orders and business activity indices continuing to trend downward from their record-setting pace in November.  Survey comments continue to cite inflation, labor shortages, and supply chain disruptions as problems their businesses face when fighting to meet the explosion of demand that has happened since our economy began re-opening. Notably, one comment wrote "The Great Resignation is real," as employees quit their jobs in droves, looking for opportunities that pay more and offer more flexible work. This issue can be clearly seen in the employment index, which moved back into contraction territory in February.  The other persistent issue – inflation – is also shown in the prices index, which increased to 83.1 and remains less than a point below its record high set last December.  Despite these persistent headwinds, the service sector remains well in expansion territory, and there are reasons for optimism.  Though still historically elevated, the backlog of orders index and supplier deliveries index remain subdued from previous record highs set earlier in the pandemic.  Meanwhile, recent movement in the inventories and inventory sentiment indexes suggest businesses are starting to finally re-stock their shelves, as both have broken into expansion territory.  In other news this morning, initial unemployment claims declined 18,000 last week to 215,000.  Continuing claims increased 2,000 to 1.476 million.  In other employment news from yesterday, the ADP employment report showed 475,000 private-sector jobs gained in February (+984,000 including revisions to prior months).  After plugging this into our model, we expect Friday's employment report to show a nonfarm payroll gain of 415,000.  Finally, data out Monday showed that car and light truck sales fell 6.4% in February to a 14.1 million annual rate.  Sales are down 11.7% from a year ago.  Expect sales to generally rise from this level in the year ahead as supply-chain issues ease.

Click here for a PDF version
Posted on Thursday, March 3, 2022 @ 11:32 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.