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March 3, 2017 By Peter Boockvar

ISM services rise in February

The February ISM services index rose 1.1 pts to 57.6 where unchanged was expected. It’s at the best level since October 2015. New orders improved by 2.6 pts to 61.2, also the best since 2015. Backlogs rose 4 pts off the 50 level. Employment was up a .5 pt to 55.2 which is where it was in November in the initial reaction after the election. Export orders jumped by 9 pts but only a few of the 18 industries surveyed even report exports. Off the highest level since April 2014, prices paid fell by 1.3 pts. Also, as seen in the manufacturing report a few days ago, the breadth of the improvement was evident as 16 of the 18 industries surveyed saw growth vs 12 last month. The two seeing contractions was real estate/rental, leasing (higher rates, less access to capital in CRE, tighter lending standards, lack of inventory?); and information.

Bottom line, the ISM was positive but threw in a caveat. They said “The non manufacturing sector reflected strong growth in February after cooling off in January. Respondents’ comments continue to be mixed, with some uncertainty; however, the majority indicate a positive outlook on business conditions and the overall economy.” Digging within the key new orders component, 13 industries saw growth vs 10 last month, so not as broad as seen with the headline figure. Employment gains were seen in 11 of 18 industries vs 7 last month.

As stated and seen, the sentiment numbers for both business and the consumer have been great post election. Transmitting that into actual growth is the thing we now need. It doesn’t look like it will happen in Q1 but let’s hope for Q2. That said, much will depend on what form tax reform takes as there will inevitably be winners and losers in any tax changes.

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Filed Under: Latest Data

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About Peter

Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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