Analysts at TD Securities note that the US non-manufacturing ISM index rose to 55.0 in December from 53.9 in November, above the 54.5 consensus and a fairly healthy level.
“The rise was in contrast to the drop in the manufacturing index (to 47.2 from 48.1). It was probably helped by the initial reaction to the U.S.-China trade deal, but the data suggest still-solid overall growth, even with weakness in manufacturing; manufacturing accounts for just 11% of GDP.”
“In other reports, the trade deficit and factory orders were down in November, as had already been signaled in preliminary partial data. The deficit fell to $43.1B, near the $43.7B consensus, from $46.9B. It is down sharply from $52.5B, on average, in Q3, so trade is on track to add significantly to Q4 GDP growth.”
“Much of the strength is likely to be offset by a drag from inventories, however, due to imports plunging after tariffs were raised in September.”
“Factory orders fell 0.7%; near the -0.8% consensus. The decline was led by a previously reported drop in volatile aircraft orders. Core capex orders were up 0.2%, revised from up 0.1%.”