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Weekly Economic Perspectives

Weekly Economic Perspectives

January 12, 2024

Weekly Economic Perspectives is intended to share timely and relevant market and economic news and data that we are observing, which help to frame our outlook.  We hope that you find this timely and interesting.


ISM Services Employment

The Institute for Supply Management publishes the results from surveys related to the manufacturing and services economy.  This week, the Services PMI results were released and showed a modest decline in the index, from 52.7 in November to 50.6 in December.  What caught our eye was the employment section of the index.  This part of the survey contracted 7.4 percentage points from 50.7 to 43.3 in the months of November to December.  The manufacturing index has been in contraction for 16 months, however, economists argue that manufacturing has become a smaller part of the US economy, so not as important.  If the Services PMI continues to slow, this would not bode well for future economic data, especially given that we are already seeing unemployment figures start to creep up.  Contracting employment data in the services sector will be watched closely going forward.

Inflation Data

This week inflation data for the month of December was released.  On Thursday, the Consumer Price Index (CPI) print came in at 3.4% on a year-over-year basis, higher than what was expected and an acceleration from the prior month of 3.1%.  The month-over-month number accelerated 0.30% which would come to 3.6% on an annualized basis, well above the Fed's target of 2%.



The Producer Price Index (PPI) came in at up 1% year-over-year, with a slight decline on a monthly basis of -0.13%.  This paints a muddled backdrop for the Federal Reserve as consumer prices seem to be staying stubbornly high while producer input prices continue to moderate and are below their historical long-term average.



Have a great week!


Gordon Asset Management, LLC Investment Policy Committee