POLAND: ING Expect Headline Inflation to Peak in March

November's ISM Services index saw its biggest drop since June, falling unexpectedly to a 3-month low 52.1 from 56.0 (a more modest dip to 55.7 had been expected). The standout subcomponents were stagflationary in direction: while Employment (51.5, vs 53.0 expected/prior) and New Orders (53.7, vs 56.6 expected and 57.4 prior) fell, Prices Paid unexpectedly rose (58.2 vs 57.0 expected and 58.1 prior). But while the headline index represented a setback after four consecutive gains, and the subcomponents disappointed, overall the report still suggests that the Services sector is in solid shape.

• The Employment pullback will receive outsized attention as estimates for Friday's November Employment Report are fine-tuned, but even with the dip, the 51.5 reading was higher than in any single month in the 12 months before October, suggesting continued resilience in hiring.
• Likewise, the Prices Paid were simply typical of levels seen in over the last several months, rather than any sign of significant inflationary reacceleration.
• Business activity slipped to 53.7 (from 57.2 prior), a 5th month of expansion following June's contraction.
• The New Orders drop reverses the jump to very elevated levels the prior two months (which averaged 58.4) but remain expansionary - though New Export orders were especially weak, falling 2.1 points to a 7-month low 49.6.
• Elsewhere, Inventories contracted (45.9) after 3 months of expansion, order backlogs remained in contraction for a 4th month (47.1), while Supplier Deliveries fell 6.9 points to 49.5 (per ISM: "the index was in contraction territory for the sixth time in 2024 — indicating faster supplier delivery performance").
• The November election and potential tariffs also get an anecdotal mention: "Generally, respondents’ comments were neutral to positive, and both positive and negative impacts were attributed to seasonality.  Not surprisingly, election ramifications and tariffs were mentioned often, with cautionary outlooks related to the potential impact on respondents’ specific industries."