The ISM non-manufacturing index, covering approximately 85% of the economy, rose +1.1 points to 55.0 in December, well above the 50 line indicating expansion. The business activity component rose a strong +5.6 points to 57.2, and 11 of 17 industries reported expansion. The trade deficit fell to -USD43.1bn in November, the lowest in over three years. On a y/y basis the decline resulted from a +0.3% increase in exports while imports fell -3.8%; imports of goods alone fell -5.7%, perhaps as a result of tariffs. Additionally, the trade deficit with China narrowed to the least in over six years. In a separate report, manufacturing continues to deteriorate. Factory orders fell -0.7% m/m to -1.5% y/y in November. Core orders for durable goods, a proxy for business investment, rose a scant +0.2% m/m to a very weak +0.4% y/y rate. Shipments of core orders, which are an input to GDP, fell -0.3% m/m, the fourth decline in five months, to a nearly flat +0.2% y/y rate.

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