The strong hiring was encouraging in January, and consumer and service sector confidence also improved, 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
February 2024

2. Source: Institute for Supply Management, Haver Analytics
As of 2/5/2024
ISM Services: Services PMI Composite Index
Seasonally adjusted, 50+ = Increasing
The Service
Sector
Risk
Level

3. The Service Sector continued
• Service sector confidence improved to start the year, as the
index increased from 50.6 in December to 53.4 in January.
• This better-than-expected result brought the index to its
highest level in four months, but service sector confidence still
sits below the highs from early 2023.
Risk
Level

4. Source: Bureau of Labor Statistics, Haver Analytics
As of 2/2/2024
All Employees: Total Nonfarm
% Change – Year to Year, Seasonally adjusted
Private
Employment:
Annual
Change
Risk
Level

5. Private Employment: Annual Change continued
• 353,000 jobs were added in January, up from the upwardly
revised 333,000 jobs that were added in December.
• This marks 37 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 1/31/2024
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 narrowed modestly in January, due to
a rise in long-term interest rates. The 10-year Treasury yield
increased from 3.88% to 3.99%.
• The 3-month Treasury yield rose from 5.40% at the end of
December to 5.42% at the end of January.
• This now marks 16 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 1/30/2024
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 improved from 108.0 in December to
114.8 in January. This brought the index to its highest level in
more than two years.
• On a year-over-year basis, confidence improved 8.30% in
January, marking the largest year-over-year increase for the
index since July 2023.
Risk
Level

10. Conclusion: Signs of Continued Growth
• The data releases in January showed signs of continued
economic growth.
• The strong hiring and improved consumer and service sector
confidence signaled solid momentum for the economy.
• 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