Big Miss In ISM Non-Manufacturing Index, Employment Component Comes In Below 50, Lowest Since January
ISM Services comes in at 51.5 vs expectations of 53.2, and a previous print of 54.3. This is the second lowest Service read of the year. And keep in mind services are what drives America. AUDJPY plunges on the news. All components come in below expectations (New Orders, Employment, Business Activity), except prices, which is almost deflationary, but not quite. And most critically, the employment read came in at 48.2: the first posted contraction since January 2010. But the US economy lost only 54K jobs (and over 160k not adjusting for birth death), ergo all is well and double dip is off the table. Crazy pills time.
From the full report:
Economic activity in the non-manufacturing sector grew in July for the seventh consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of
the Institute for Supply Management™ Non-Manufacturing Business Survey
Committee; and senior vice president — supply management for Hilton
Worldwide. "The NMI (Non-Manufacturing Index) registered 54.3 percent in
July, 0.5 percentage point higher than the 53.8 percent registered in
June, indicating continued growth in the non-manufacturing sector at a
slightly faster rate. The Non-Manufacturing Business Activity Index
decreased 0.7 percentage point to 57.4 percent, reflecting growth for
the eighth consecutive month. The New Orders Index increased 2.3
percentage points to 56.7 percent, and the Employment Index increased
1.2 percentage points to 50.9 percent, reflecting growth after one month
of contraction. The Prices Index decreased 1.1 percentage points to
52.7 percent in July, indicating that prices are still increasing but at
a slower rate than in June. According to the NMI, 13 non-manufacturing
industries reported growth in July. Respondents' comments are mixed.
They vary by industry and company, with a tilt toward cautious optimism
about business conditions."
INDUSTRY PERFORMANCE (Based on the NMI)
The 13 industries reporting growth in July based on the NMI composite
index — listed in order — are: Real Estate, Rental & Leasing; Arts,
Entertainment & Recreation; Management of Companies & Support
Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade;
Information; Other Services; Transportation & Warehousing; Public
Administration; Mining; Health Care & Social Assistance; Educational
Services; and Wholesale Trade. The four industries reporting
contraction in July are: Construction; Utilities; Accommodation &
Food Services; and Finance & Insurance.
WHAT RESPONDENTS ARE SAYING ...
- "Our business conditions continue to dramatically outpace last year's." (Information)
- "Although unemployment remains high, consumer attitude has improved
and translates into higher activity levels for us." (Arts,
Entertainment & Recreation)
- "Capital funding remains tight." (Accommodation & Food Services)
- "Concerning forecasts and the instability in markets are continuing our focus on cautiousness." (Retail Trade)
- "We continue to see signs of improvement and a slow jobless
recovery. We are also seeing a one-time windfall of business as a result
of the disaster in the Gulf." (Management of Companies & Support
|ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
|Backlog of Orders||52.0||55.5||-3.5||Growing||Slower||3||54.5||57.0||-2.5|
|New Export Orders||52.0||48.0||+4.0||Growing||From Contracting||1||56.5||56.0||+0.5|
|Inventory Sentiment||59.0||59.0||0.0||Too High||Same||158||N/A||N/A||N/A|
* Non-Manufacturing ISM Report On Business® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. Manufacturing ISM Report On Business® data is seasonally adjusted for New Orders, Production, Employment, Supplier Deliveries and Inventories.