The December PMI index from the ISM Service released on Friday beat expectations and raised fears of a sharp economic slowdown. Wells Fargo analysts predict a recession is coming, but note that this report does not market its onset. KEY QUOTES: “One confusing takeaway from today’s ISM services report is that the service economy is contracting to the manufacturing side of the economy in contraction. The main service ISM was 9.6, down 6.9 points. Excluding the decline caused by the pandemic, it is the largest monthly decline since the financial crisis of November 2008. “The contractionary reading in the employment component appears to be at odds with the 223,000 workers that employers reported adding in December (see this morning’s nonfarm payrolls report). But a reading below 50 ( 9.8) shouldn’t mean layoffs, so much as trouble finding people.” „That’s a pretty bad report for service performance through the end of 2022. We’re trying not to put too much emphasis on it. for a one-month release, but rapid deterioration of key components is not good news. In a sense, the Fed is the economic policy that aims to slow the economy without destroying the labor market.
