The strong hiring in February was encouraging, but service sector and consumer confidence fell modestly, 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
March 2024

2. Source: Institute for Supply Management, Haver Analytics
As of 3/5/2024
ISM Services: Services PMI Composite Index
Seasonally adjusted, 50+ = Increasing
The Service
Sector
Risk
Level

3. The Service Sector continued
• Service sector confidence fell in February, as the index
dropped from 53.4 in January to 52.6 in February.
• Despite the decline, service sector confidence still sits in
expansionary territory.
Risk
Level

4. Source: Bureau of Labor Statistics, Haver Analytics
As of 3/8/2024
All Employees: Total Nonfarm
% Change – Year to Year, Seasonally adjusted
Private
Employment:
Annual
Change
Risk
Level

5. Private Employment: Annual Change continued
• 275,000 jobs were added in February, following the
downwardly revised 229,000 jobs that were added in January.
• This marks 38 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 2/29/2024
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 in February, due to a rise in
long-term interest rates. The 10-year Treasury yield increased
from 3.99% to 4.25%.
• The 3-month Treasury yield rose from 5.42% at the end of
January to 5.45% at the end of February.
• This now marks 17 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 2/28/2024
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 fell from 110.9 in January to 106.7 in
February, due to souring consumer views on current
economic conditions.
• On a year-over-year basis, consumer confidence improved
3.19% in February.
Risk
Level

10. Conclusion: Growth Continues, but Risks Remain
• The data releases in February showed signs of continued
economic growth.
• The strong hiring signaled solid momentum for the economy.
• Given the declines during the month, service sector and
consumer confidence are worth monitoring going forward.
• 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
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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