Service sector and consumer confidence improved modestly in November, says Sam Millette, director, fixed income, in his latest Economic Risk Factor Update. For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.

1. The Independent Market Observer
Economic Risk Factor Update
December 2023

2. Source: Institute for Supply Management, Haver Analytics
As of 12/05/2023
ISM Services: Services PMI Composite Index
Seasonally adjusted, 50+ = Increasing
The Service
Sector
Risk
Level

3. The Service Sector continued
• Service sector confidence increased modestly from 51.8 in
October to 52.7 in November.
• This result left the index in expansionary territory for the
eleventh consecutive month.
• Confidence remains below the levels we saw throughout
much of 2022 and the start of 2023.
Risk
Level

4. Source: Bureau of Labor Statistics, Haver Analytics
As of 12/08/2023
All Employees: Total Nonfarm
% Change – Year to Year, Seasonally adjusted
Private
Employment:
Annual
Change
Risk
Level

5. Private Employment: Annual Change continued
• 199,000 jobs were added in November, which was up from the
150,000 jobs that were added in October.
• This marks 35 consecutive months of job growth, highlighting
the current health of the labor market despite the challenges
created by inflation and the tight labor supply.
Risk
Level

6. Source: Haver Analytics
As of 11/30/2023
Spread Between 10-Year U.S. Treasury and 3-Month U.S. Treasury
Yield Curve
(10-Year Minus
3-Month
Treasury Rates)
Risk
Level

7. Yield Curve (10-Year Minus 3-Month Treasury Rates)
continued
• The yield curve inversion increased in November, due to a sharp
fall in long-term interest rates. The 3-month Treasury yield fell
from 5.59% at the end of October to 5.45% at the end of
November. The 10-year Treasury yield fell from 4.88% to 4.37%.
• This now marks 14 consecutive months with an inverted
3-month 10-year yield curve. While this doesn’t guarantee that
the economy will enter a recession, it’s a widely monitored
technical signal that could indicate further slowdowns.
Risk
Level

8. Source: The Conference Board/Haver Analytics
As of 11/28/2023
Conference Board: Consumer Confidence
% Change – Year to Year Seasonally adjusted, 1985=100
Consumer
Confidence:
Annual
Change
Risk
Level

9. Consumer Confidence: Annual Change continued
• Consumer confidence rose from 99.1 in October to 102.0 in
November. While this improvement ended a 3-month streak of
declining confidence, the index remains below the recent high
of 114.0 we saw in July.
• On a year-over-year basis, confidence increased 0.59%
in November.
Risk
Level

10. Conclusion: Economy Continues to Grow
• The data releases in November showed signs of continued
economic growth.
• The modest improvements of service sector and consumer
confidence were welcome developments, but both indices
remain below the recent highs.
• The path of recovery remains uncertain in the short term, and
caution is still warranted.
Risk
Level

11. Certain sections of this commentary contain forward-
looking statements that are based on our reasonable
expectations, estimates, projections, and assumptions.
Forward-looking statements are not guarantees of future
performance and involve certain risks and uncertainties,
which are difficult to predict. Past performance is not
indicative of future results.
Diversification does not assure a profit or protect against
loss in declining markets. All indices are unmanaged, and
investors cannot invest directly in an index.
The information contained herein is provided for
informational purposes only and is based upon sources
believed to be reliable. No guarantee is made as to the
completeness or accuracy of the information.
Disclosure