ISM Misses: Prints 54.4, On Expectations Of 54.5, Previous 56.3, Huge Jump in Prices Paid As Inflation Collapses Margins
ISM comes at the lowest print of the year, as it prepares to breach 50 next month:
And for all those not seeing inflation anywhere, better ask all these companies (that have been hoarding cash for a reason): the Price Paid component has surged, even as the broader economy is deleveraging, as company margins are forced to eat the increase in input costs. This is very scary indicator for Q3 EPS.
And the scariest reading: Inventories come at record highs!
From the survey respondents: 4 out of 5 is sufficient to give an idea of how things are going.
- "Business results (top and bottom line) continue to meet or exceed
our operating plan and exceed prior year performance by double digits."
- "Business continues flat relative to prior month and is expected to
remain flat. Commodities continue to be the main concern heading into
2011." (Food, Beverage & Tobacco Products)
- "Our business is softening due to seasonal considerations. Overall, our situation is much better than 2009." (Machinery)
- "Customers seem to be pulling back on orders. I suspect that they
are trying to reduce their inventory for the approaching year-end."
- "Strategic customers reducing order quantities." (Computer & Electronic Products)
For the bloodbath among the various indices, especially the all imporant New Ordes, Production, Employment, and Supplier Deliveries see table below, which we fail to see how can be described as "growing" by the ISM when all of these are plunging. The one thing that IS growing: inventories, as fake growth continues, and, of course, prices, thank you inflation.