• Shares halted for DELL

   

  
  
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• U.S. non-manufacturing continues to expand albeit at a slower pace

   The U.S. Non-Manufacturing indexed slipped modestly in January to 55.2, down from a revised 55.7 the

  prior month. This was slightly better than what the market had expected which was 55.0.

   The employment sub-index increased to 57.5 which is the highest level since March 2012. New orders

  fell for the month of a January, to 54.4.

   Business activity retreated to 56.4 on the month. The price index on the other hand, edged up indicating

  an increase in inflation for the month of January.

  Key Implications

   While the gains in the manufacturing numbers released last Friday surprised us all, the same cannot be

  said for this morning’s release of the U.S. ISM non-manufacturing index. The service sector continues to

  expand and sustained improvements in employment levels will keep driving it forward.

   Total non-farm payroll numbers released last Friday reaffirm the ongoing recovery to the labor market.

  Probably more important than the January release were the upward revisions to 2012Q4′s job numbers,

  which added an additional 150k jobs in the final three months of the year. Moving forward, we expect

  that the ongoing strength in the labor market will continue to provide a boost to the service index.

   The negative GDP print last week, although disappointing, was more of statistical anomaly than

  anything else – attributed to sharp drops in transitory factors such as defense spending and net trade.

  There is no question that the expiration of the payroll tax-breaks and looming spending cuts pose

  considerable headwinds in the near term. Although corporate balance sheets remain strong, businesses

  will most likely remain on the sidelines for the first half of 2013, and wait for this fiscal storm to pass.

  Once it does, we believe the stage is set for stronger growth in the US.

  
  
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