Millan Mulraine, Deputy Head US Macro Strategy at TDS, suggests that the US economic growth momentum has slowed, and while the headwinds to the manufacturing sector appear to have abated the fallout in the service sector should continue to play out.
“In March, TD expects the headline ISM nonmanufacturing index to rise only marginally, climbing to 53.6 from 53.4, owing to a snapback in employment activity. Despite the very marginal rebound improvement in the headline index, the gain is expected to mark the end of four consecutive months of declines. However, the 3M average on this indicator, a more reliable gauge of growth momentum, should continue drifting lower, falling from 54.2 to 53.5 – a two-year low.
Despite the uptick in the headline index, the details of the report should be broadly weak, with growth momentum in business activity (a proxy for production activity) and new orders decelerating further. The outlook for the sector, however, is slightly favorable, with momentum expected to rebound more meaningfully in the months ahead.”
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