J.P. Morgan: A moderate recession is likely in 2023

J.P. Morgan: A moderate recession is likely in 2023

Recession (threat)
Recessie2.jpg

The US ISM non-manufacturing PMI survey fell to 49.6 in December. This was the first contractionary print (below 50) for the service sector since May 2020.

The new orders component of the index dropped by over 10 points to 45.2, a level that has coincided with a US recession in the past. This supports the view from our 2023 outlook that the US and other developed market economies are likely to enter a moderate recession this year. However, the equity market took the data in its stride. This also reinforces our view that a moderate recession is already widely expected by equity investors and had largely been priced in at the recent lows.

ISM non-manufacturing PMI new orders, index level

16012023 J.P. Morgan

Source: ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 13 January 2023.