The leading indicator data sets I follow continue to
point toward slow growth for the US economy. New order
diffusion indices covering both manufacturing and the
service sectors are positive but subdued. The recent
volatility in the services sector new order index is
interesting, because the sector has been more stable
than the more intensely cyclical manufacturing sector.
It may well be that the run-up in the oil price
experienced from late Nov. ' 05 through mid - July
took a toll on profit margins and confidence in this
sector, where pricing power can lag rising costs.
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