It's all about the Rate of Change...
While many on Wall Street cheered an expectations-beating sequential uptick in the ISM Services index, one data point does not make a trend. More importantly, the Services index and its individual components continue to trend lower year-over-year.
Here's some brief analysis from our Macro team in a note sent to subscribers earlier this morning:
"While industrial activity has stabilized against 13 months of negative comps, domestic service sector activity continues to slow off its mid-2015 highs. Headline ISM Services along with the Employment and New Orders components improved sequentially in March but the 9-month trend remains one of lower highs and lower lows. On the Labor Front, the trend has been similar as yesterday’s JOLTS data for February showed Job Openings decline by -159K, continuing the 8-month retreat off the mid-2015 peak."
Here's the key chart on ISM Services
(Notice the peak in July 2015 and the year-over-year slowing in the data)
Stick with the process. Don't get sucked into Wall Street's storytelling.
