Financial and Economic Brief - January 9, 2018by © Liberty Publishing, Inc.
Service Sector Growth Slows
According to a survey of Reuters economists, growth in non-manufacturing economic activity continued to fall in December, after dropping more than expected in November. The measure of economic movement in the service sector fell to 55.9, below the expected level of 57.6 forecast. Even though the growth rate fell in December, the numbers represent the 96th consecutive month of economic growth in the service sector. The index measures non-manufacturing activity in 17 industries. A reading above 50 indicates expansion in the service sector, and a reading below 50 signals contraction.
GoPro Cutting 20% of Staff
GoPro is shutting down its drone business and cutting 20% of its staff after “weak demand” for its products. Founder and CEO Nicholas Woodman is also cutting his annual pay to $1. The company said its Karma drone was the second largest seller in its price range, but “a hostile regulatory environment in Europe and the United States”, and a competitive market, makes staying in the business impossible. GoPro said it will exit the drone business once it sells off its remaining inventory. The company already announced a price cut for its core camera product, the HERO5, due to weak pre-holiday sales.
S&P, Dow Trade Lower on Monday
The S&P 500 and the Dow were trading lower on Monday, as losses in healthcare and financial stocks hindered Wall Street’s strongest start to a year in a decade. “The market was probably a little bit overbought, it was a big week for stocks in terms of strength and breadth, it’s more of a pause,” said John Brady, senior vice president at futures brokerage R.J. O‘Brien & Associates. “The weakness might be there for a day or two, with some rotationary balancing, it won’t take out much.” Investors are waiting for the fourth-quarter earnings reports to measure the impact of recent tax cuts.