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US Services Sector Decelerates. Inflation Pressures Build
The US services sector expanded at a slower pace last month, ISM said Thursday.
The non-manufacturing gauge came in 55.9 for November, essentially matching consensus, which was looking for 55.8. The range was 54 to 57.6.
While 55.9 is still a solid read, it's the lowest since May and comes as the US struggles with a rapidly worsening public health crisis that's prompted new restrictions on services sector businesses and even compelled some local officials to institute stay-at-home orders.
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I’ve observed that one inflation driver is that small service businesses are pushing up prices in order to stay afloat. I found that a haircut at my usual place suddenly went from $14 to $21 (yeah, I’m cheap). Of course, you can’t begrudge them the increase, and I suspect it will stick post-Covid as well. But a transitory round of inflationary gasps by small businesses to make it to 2021 won’t hurt. I’ll keep whistling past the equity markets for now, as the umber hulks of Fed liquidity move around, seeking to break out of there.