Manufacturing has been accelerating but the broad-based service sector continues to struggle, according to the latest survey from the Institute for Supply Management.
The ISM Non-Manufacturing Index increased from 49.8 in December to 50.5 in January but remains stuck in the narrow range it has been in for the past five months. A reading above 50 points to expansion.
Though back in expansionary territory, at 50.5, firms in the service sector are barely expanding amid continued high unemployment and sluggish consumer consumer spending.
Based on the survey, companies remain reluctant to hire, with the employment index rising just 1 point to 44.6.
If job creation remains elusive, expect the Federal Reserve to hold the fed funds rate at 0 – 25 basis points and maintain its language that current conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
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