MNI INTERVIEW: US Services Growth Up Despite Geopolitical Risk

By Ryan Hauser

     WASHINGTON (MNI) - Stronger US non-manufacturing activity is threatened by

geopolitical concerns, according to ISM business survey committee chair Anthony

Nieves.

     The ISM's Non-Manufacturing Index gained 1.1 points to 55 in December, with

readings greater than 50 signaling expansion. That's a big contrast with the ISM

factory index's plunge to the lowest since 2009. 

     Respondents to the non-factory survey are "positive about the potential

resolution on tariffs" with China according to ISM. Nieves said the US

non-manufacturing sector is taking seriously efforts to clamp down on China's

enforcement of fair intellectual property practices. Despite the lack of

concrete details regarding a Phase One agreement with China, "eventually there

is going to be a resolution," Nieves said in an interview with MNI.

     "We'll see manufacturing coming out of the doldrums and that will also

positively impact the non-manufacturing side as well," Nieves said. The US

economy should "continue to have this consistent, intermittent growth for

non-manufacturing going forward," though Nieves added that "I don't think we'll

see the huge spikes that we had back in 2018, but 2020 still looks pretty good."

     Uncertainty in the Middle East could have negative effects on the US since

petroleum is responsible for "most of the price increases or the index

increasing in this report," especially given the non-manufacturing sector's

reliance on trucking, he said. 

     "If we see, like we did in previous conflicts when the price of oil goes

up, that will definitely drive pricing for this sector," he said.

--MNI Washington Bureau; +86 (10) 8532-5998; email: ryan.hauser@marketnews.com

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