--- title: "Monday Update: Economy Still Strong, But Signs of Slowing" description: The economy is going strong, but are there signs of a slowdown ahead? Commonwealth CIO Brad McMillan reviews the latest economic news in his Monday update. image: https://blog.commonwealth.com/hubfs/Brad_Images_IMO_Blog/2017/MarketOutlook_1.jpg --- [![The Independent Market Observer](https://blog.commonwealth.com/hubfs/IMO-Title-1.png "The Independent Market Observer")](https://blog.commonwealth.com/independent-market-observer) [![Commonwealth Financial Network](https://blog.commonwealth.com/hubfs/lockup_citron-1.png "Commonwealth Financial Network")](https://www.commonwealth.com/) - [Home](https://blog.commonwealth.com/independent-market-observer) - [About](https://learn.commonwealth.com/about/) ### ![print this page](https://blog.commonwealth.com/hs-fs/file-1376458285-gif/images/print.gif)Print # [Monday Update: Economy Still Strong, But Signs of Slowing](https://blog.commonwealth.com/independent-market-observer/monday-update-economy-still-strong-but-signs-of-slowing) Posted by [Brad McMillan, CFA®, CFP®](https://blog.commonwealth.com/independent-market-observer/author/brad-mcmillan-cfa-caia-mai) Find me on: [LinkedIn](https://www.linkedin.com/in/bradmcmillancfa) [Twitter](https://x.com/BradMcMillanCFA) This entry was posted on Jan 8, 2018, 12:08:04 PM and tagged [In the News](https://blog.commonwealth.com/independent-market-observer/topic/in-the-news) [Leave a comment](https://blog.commonwealth.com/independent-market-observer/monday-update-economy-still-strong-but-signs-of-slowing#comments-listing) ![Monday update](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/2017/MarketOutlook_1.jpg?width=300&name=MarketOutlook_1.jpg "Monday update")Last week was a busy one for data releases, giving us a wide-ranging look at the economy. Overall, the news remains good and the expansion continues. But there are also signs that growth may be slowing. ##### Last week’s news On Wednesday, the **Institute for Supply Management (ISM) Manufacturing index** surprised to the upside, rising from 58.2 in November to 59.7 for December. This result was well above expectations for a small decline to 58. Growth was widespread, with 16 of 18 industries rising. The increase appears to reflect continued strength in demand outside the U.S., driven by a weak dollar and strong global growth, and the index remains close to a 13-year high. This is a diffusion index, where values above 50 signal expansion, so this is very positive for the economy as a whole. Also on Wednesday, the minutes of the December 13 meeting of the **Federal Open Market Committee** were released. There was little new news, however, as the minutes were largely in line with what had been expected. They pointed to continued economic growth and slow rate increases through 2018. On Friday, we got three reports. First up, and most important, was the **employment report**, which disappointed. Job growth declined from an upwardly revised 252,000 in November to 148,000 in December—well below expectations of a smaller decline to 190,000. While some decline was expected, as November included a rebound from the hurricanes, the size of the decline suggested that employment growth may be slowing more than had been thought. The unemployment rate remained steady at a still-strong 4.1 percent, while average hours worked also stayed at a healthy 34.5. These numbers suggest that while job growth may be slowing, the labor market remains healthy. Wage growth matched expectations, at 0.3 percent in December. But November was revised down from 0.2 percent to 0.1 percent, offsetting that. Overall, the employment report indicates continued growth but that it may be slowing. Next up was the **international trade report**, where the trade deficit declined from $48.9 billion to $50.5 billion, worse than expectations of $49.9 billion. This leaves trade as a drag on growth in the fourth quarter, although recent trends suggest this may be improving. Finally, the **ISM Nonmanufacturing index** declined, from 57.4 in November to 55.9 for December, well below expectations of 57.6. As with the ISM Manufacturing index, despite the decline, this leaves business confidence at high levels and is a signal of continued expansion. That said, the decline was another sign that momentum may be slowing in large parts of the economy. ##### What to look forward to There will be two major data releases to pay attention to this week, both on Friday. The first data release will be the **Consumer Price Index**. The headline series, which includes both food and energy, is expected to decline from 0.4 percent in November to 0.2 percent in December, driven largely by declining gasoline prices. The annual figure is expected to decline from 2.2 percent to 2.1 percent. The core inflation number, on the other hand, which excludes food and energy, is expected to rise on a monthly basis from 0.1 percent in November to 0.2 percent in December, which would leave the annual figure at 1.7 percent. If these numbers come in as expected, they would remain consistent with past performance, and there would be no significant market impact. The second data release will be **retail sales**. The headline number, including auto sales, is expected to drop from 0.8 percent in November to a still-robust 0.4 percent for December, driven by a decline in auto sales. Core retail sales, which exclude auto sales, are also expected to decline, from 1 percent in November to a still-strong 0.4 percent in December. There may be some downside risk to this figure. Overall, if the numbers come in as expected, they would indicate continued strong consumer demand growth in the fourth quarter. 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