It was just on Thursday that the markets hit all-time highs, based on continued growth and on hopes for tax reform. That tax reform passage still looks close, but it has run into some last-minute snags that make some of Thursday’s gains feel extended. Now the financial markets are getting to adjust to two strong economic reports that were actually both under expectations.

November’s key ISM Index hit 58.2 in November, down from the October reading of 58.7 and slightly under the expected 58.4 Bloomberg consensus estimate.

While the number is a dip, new orders rose 0.6 points to 64.0 and the backlog of orders was flat at 55.0. The production index rose to 63.9 and the Employment index was at 59.7. Weakness has been seen in delivery times, while input costs were inflationary but were less aggressive than in October. Prices Index registered 65.5% in November, a three percentage point decrease from the October level of 68.5.

Of the 18 manufacturing industries tracked by ISM, 14 reported growth in November. According to the ISM report:

Comments from the panel reflect expanding business conditions, with New Orders and Production leading gains, employment expanding at a slower rate, order backlogs stable and expanding, and export orders all continuing to grow in November. Supplier deliveries continued to slow (improving), but at slower rates, and inventories continued to contract during the period. Price increases continued, but at a slower rate. The Customers’ Inventories Index improved but remains at low levels.

The PMI Manufacturing Index came in at 53.9 in November, down from the prior 54.6 reading from October and under the Bloomberg consensus estimate of 54.5. Keep in mind that October’s reading was almost a high for 2017 before this downtick, and the flash reading had indicated strong new orders but some pressure that had been seen in the same ISM reading.

The IHS Markit U.S. Manufacturing PMI reading noted two key issues for the November reading, both of which fit within the Federal Reserve’s issue of fostering full employment and 2.0% to 2.5% inflation. Employment levels grew by the second-strongest rate seen since June 2015 in November. Average prices charged by manufacturers rose further in November, with inflation accelerating to the fastest in almost four years.

The financial markets are more keyed in on tax reform on Friday, but the stock market remains right under all-time highs.

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