November Non-Manufacturing ISM At 48.7, 1.9% Drop Back To Contraction Levels, Comes Below 51.6 Expectation

A major drop for Service ISM: the core part of the US economy is back into contraction mode.

From the press release:

(Tempe, Arizona) — Economic activity in the non-manufacturing sector
contracted in November after two consecutive months of expansion, 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 48.7
percent in November, 1.9 percentage points lower than the 50.6 percent
registered in October, indicating contraction in the non-manufacturing
sector after two consecutive months of expansion. The Non-Manufacturing
Business Activity Index decreased 5.6 percentage points to 49.6
percent, reflecting contraction after three consecutive months of
growth. The New Orders Index decreased 0.5 percentage point to 55.1
percent, and the Employment Index increased 0.5 percentage point to
41.6 percent. The Prices Index increased 4.8 percentage points to 57.8
percent in November, indicating an increase in prices paid from
October. According to the NMI, six non-manufacturing industries
reported growth in November. Respondents' comments remain cautious
about business conditions and reflect concern over the length of time
for economic recovery."

Key concerns voiced by respondents:

• "Capital markets remain
  very tight; lenders are not releasing funds for development projects,
  limiting expansion." (Accommodation & Food Services)
• "Fourth quarter still looking grim, but potential upturn for Q1 2010." (Professional, Scientific & Technical Services)
• "No one trusts that the recovery is real. Seems everything and everyone is in a holding pattern." (Public Administration)
• "Business is still flat." (Wholesale Trade)
• "U.S.
  business remains better than 2007 levels, although it's been through
  personnel and cost reductions that we are now profitable. Business
  continues to be about 8 percent below 2008 levels." (Real Estate,
  Rental & Leasing)

Comments

[serendipitous_one]

Anyone else seeing this? 

On a day when retail sales reports miss almost across the board (JCP & KSS the notable exceptions, see  http://www.cnbc.com/id/34241771) the RLX (S&P Retail Index) seems to be frozen at yesterday's close...at least on my two trading platforms.   

[Dixie Normous]

I see the same thing. Must just be a glich, there is no way the S&P would hold up the data because it was crap.

[rhinotrader]

Well, the tape doesn't give a fuck.

[Eduardo]

http://www.youtube.com/watch?v=YWuSi00CcNk

[curbyourrisk]

So, this puts us back in recession?  OK....how many recessions does it take to be classified a Depression?  Over/under is set at 5.

[Cognitive Dissonance]

curbyourrisk,

Someone junked you for unknown reasons. Personally I agree that it's usually with hindsight that a depression is declared, when the recessions stack up.

But I would put the over/under at 3. The will try to explain away the second dip down as a continuation of the first. But the third time down will be the charm.

It's a political question, not an academic or economic one.

[HEHEHE]

That's not what the headlines read on Bloomberg and CNBC.

[lsbumblebee]

"Store chains also blamed warm November weather, which kept consumers from buying winter clothes."

http://www.cnbc.com/id/34241771

Cuz ya see, we all know consumers are so stupid that unless we can place them into a blizzard-like atmosphere under laboratory conditions they forget that it gets cold in the winter.

[Gilgamesh]

And if the weather was cold (or it rained), they would blame it on consumers not going outside because of the weather.

Not to worry, Cash for Clothes is being announced by Gibbsy now.

[Racer]

Another green shoot and as long as they can hit the dollar again and get those computers buying who cares.

Forget economics, companies, yields, p/e or anything fundamental, as long as they can push the dollar back down again for program HFT short gunners it won't matter a bit

[Gilgamesh]

There is not a news story possible now that would cause Algos to give it a score below "buy."

[Anonymous]

Well, that explains the drop on the data and then back up 50 odd points on the Dow - can't let a little thing like bad data get in the way...

DavidC

[gatopeich]

More good news.

Impatient to see what the algos will do tomorrow, and what 'news' will we have to try to explain it.

[Gilgamesh]

Bad news = sell the dollar = ramp the markets.  No need to even bother about spinning news from bad to good anymore; I'd be afraid of actual good news reports, if I needed the market to go higher.

[Anonymous]

Everything is down except for PRICES, +4.8
"Beard" Ben's 'da man!