Economy-watchers breathed a sigh of relief on Wednesday after the Institute for Supply Management reported a pickup in January activity among non-manufacturers. Of particular interest, two days ahead of Friday’s payrolls report, was news that employment among non-manufacturers — mainly service companies — increased last month. The employment index rose to 56.4, the highest reading since November 2010.
When consumers and firms hire work for outsiders, rather then doing it in house, they turn money over one more time in the period. That is rising M1 velocity and happens when consumers and firms feel relaxed about holding less cash. Dave Beckworth will be happy.
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