Wednesday, August 5, 2009
The Institute for Supply Management's service sector data for July was a bit disappointing, since conditions deteriorated instead of improving in line with manufacturing conditions. And since the service sector is by far the largest sector of the economy this is reason to be concerned. Is the July data just a random blip (note all the wiggles in the second chart), or is it a meaningful deterioration? I'm inclined to say July was just noise, and that we are not on the cusp of another downturn, but that's only a guess at this point. Still, I base my guess on the preponderance of evidence (e.g., commodity prices, credit spreads, swap spreads, auto sales, unemployment claims, corporate layoffs, equity prices), which to me shows that the economy is now improving.
Posted by Scott Grannis at 10:56 AM