Some weaknesses surface in the latest ISM services report. Here are the details.
Please consider the November 2024 ISM® Services Report On Business® emphasis mine.
What Respondents Are Saying
- “Federal Reserve interest rate cuts have not had the desired effect on mortgage rates yet. With election results mostly determined, expansion of residential construction is anticipated, but the unknown effect of tariffs clouds the future.” [Construction]
- “All operations are normal at the moment. Nothing local or national that is having any major effect on our operations.” [Educational Services]
- “Higher level of activity is driving the need for additional resources.” [Finance & Insurance]
- “We have concern after the presidential election that tariffs will affect prices for electronics and components in 2025.” [Information]
- “Domestic lead times still seem very long. We are having to go to China for many electrical equipment requirements. Even after tariffs, the price is half, and so are the lead times.” [Management of Companies & Support Services]
- “Election results and the potential tariff changes would impact inventory and lead to higher prices in the hospital supply chain. What we saw during COVID-19 with startup U.S. production is a warning sign again.” [Professional, Scientific & Technical Services]
- “Construction materials are shorted or hard to get due to increased construction projects in the area and (in the) U.S. Sometimes projects are delayed due to this.” [Public Administration]
- “We finished a solid quarter and are planning on a similar holiday period. Not breaking any records, but positive.” [Retail Trade]
- “Still waiting to see how presidential cabinet picks shake out, if they are confirmed and how they will affect our operations going forward. Holding capital projects now until the cabinet is complete and we know how federal funds will be dispersed going forward.” [Transportation & Warehousing]
- “Even though we are reducing our spending and our employment levels, we have a positive outlook for 2025 performance with expected reinvestment of funds.” [Utilities]
Respondents seem concerned over tariffs and Trump administration policies.
ISM Manufacturing Contracts 8th Month
On December 2, I noted ISM Manufacturing Contracts 8th Month and the 24th Time in Last 25 Months
Details suggest manufacturers are scrambling as best they can to avoid Trump’s tariff threats.
Manufacturing and non-manufacturing (services) groups are still trying to get a handle of Trump’s tariff threats and policies.
Also note rising prices despite weakening growth with contracting exports and backlogs.
One of my big concerns is how China might respond to tariffs. For discussion, please see China Halts Rare Exports Used by US Technology Companies and the Military
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