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Relationship Between ISM Employment and Payrolls Called Further Into Question

US DATA
  • Looking at the size of the surprise decline in ISM services, it’s worth noting a seeming structural break in the historical relationship with payrolls growth ahead of and especially since the pandemic.
  • See the charts below comparing payrolls growth on both a % Y/Y and M/M 3mma change basis.
  • On the historical relationship at least, an ISM employment series reading of 43.8 (Mfg & Services weighted by their shares of payrolls, with the latter about 90%) has previously been seen with payrolls growth of circa -300k vs the +216k registered today.


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