Employment component in ISM services falls to lowest since when survey began in 1997, not including Covid shutdowns

The December ISM services index softened to 50.6 from 52.7 in November and that was below the estimate of a slight drop to 52.5. The standout to the downside was the 7.4 pt plunge in the employment component to just 43.3 and that is the weakest figure I have dating back to 1997 when the question was first asked, not including the covid shutdown collapse. New orders were down by 2.7 pts to 52.8 and only half of the 18 companies asked saw growth in orders vs 11 in November and 12 in the three prior months. Backlogs remained under 50 at 49.4 vs 49.1 in November. Inventories fell 5.8 pts but only after being up a similar amount in the month before. Prices paid were little changed, down .9 pts to 57.4.

Breadth deteriorated too with just 9 of 18 industries surveyed seeing growth vs 15 in November. Nine industries experienced a contraction vs just 3 in the month before.

The ISM’s bottom line was “There are concerns related to economic uncertainty, geopolitical events and labor constraints.”