Services ISM Modestly Beats Expectations, Reports No Commodities Declined In Price

Tyler Durden's picture

In the too little too late department, the ISM just released its Non-Manufacturing report on business, which was probably the first actual economic beat of the last week, coming at 54.6 on expectations of 54.0, up from 52.8 previously. That this was merely a countertrend bounce in what is now a secular decline from the 60 top in Q1 2011 is largely irrelevant, and just like the Mfg ISM which we now expect will drop under 50 in two months or less, the Services ISM will follow suit. For the consumer discretionary bulls out there, we would like to note that of the 18 industries that are reported in the index, only two reported contraction: Educational Services and Retail Trade. Of course, that would be retail for the lower and middle classes. The Tiffany's of the world will certainly not have any such problems until the next GFC.

Some tidbits from the respondents:

  • "Business is O.K. Fuel prices and truck availability are starting
    to be a negative force on our supply chain." (Agriculture, Forestry,
    Fishing & Hunting)
  • "Business conditions are stabilized." (Health Care & Social Assistance)
  • "First and second quarters of 2011 have been up 25 percent over
    2010; however, we expect a slight slowdown over the summer months."
    (Professional, Scientific & Technical Services)
  • "Uncertainty within commodity markets, especially fuel- and
    oil-based products, is putting pressure once again and forcing us to
    retrench as we look for stability. We expect the remainder of 2011 and
    at least the first two quarters of 2012 to be tumultuous." (Retail
  • "Volatile commodity prices adding stress to meat and dairy
    producers; increasing fuel prices are a problem for many." (Wholesale

Odd then that so few respondents are seeing modest commodity price impact when one paragraph down we read the following:

Commodities Up in Price

Adhesives; Air Freight (2); Aircraft Parts; Airfares (6); Aluminum; Beef (2); Can Liners (2); Chemicals; Chemical Products; Coffee; Conveyor Products; Copper (4); Copper Products (6); Copper Wire; Cotton Products (9); #1 Diesel Fuel (8); #2 Diesel Fuel (11); Food Products; Fuel (17); Fuel Products; Fuel Surcharges (5); Gasoline (8); HDPE; LDPE; Latex Gloves (5); Ocean Freight; Oil; Oil Products (2); Packaging Materials (3); Paper (7); Paper Products; Petroleum Products (5); Petroleum Resin Products; Plastics (2); Plastic Products (3); Polyethylene Bags (6); Polyethylene Resins; Rubber Based Products; Steel (6); Steel Pipe and Fittings (2); Steel Products (6); Textiles (2); Transportation Costs (2); and Transportation Services.

Commodities Down in Price

No commodities are reported down in price.

Here is why the market couldn't care less about this data:

And a full breakdown:

MAY 2011
  Non-Manufacturing Manufacturing
Index Series
Direction Rate
NMI/PMI 54.6 52.8 +1.8 Growing Faster 18 53.5 60.4 -6.9
Business Activity/Production 53.6 53.7 -0.1 Growing Slower 22 54.0 63.8 -9.8
New Orders 56.8 52.7 +4.1 Growing Faster 22 51.0 61.7 -10.7
Employment 54.0 51.9 +2.1 Growing Faster 9 58.2 62.7 -4.5
Supplier Deliveries 54.0 53.0 +1.0 Slowing Faster 14 55.7 60.2 -4.5
Inventories 55.0 55.5 -0.5 Growing Slower 4 48.7 53.6 -4.9
Prices 69.6 70.1 -0.5 Increasing Slower 22 76.5 85.5 -9.0
Backlog of Orders 55.0 55.5 -0.5 Growing Slower 5 50.5 61.0 -10.5
New Export Orders 57.0 53.5 +3.5 Growing Faster 9 55.0 62.0 -7.0
Imports 50.5 57.0 -6.5 Growing Slower 2 54.5 55.5 -1.0
Inventory Sentiment 55.0 57.5 -2.5 Too High Slower 168 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 39.5 40.5 -1.0

* 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.

** Number of months moving in current direction.

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dieyoung's picture

Even Christina Romer is on bloomberg right now saying that US has had "bad economic data day in and day out" and that the NFP numbers were more disappointing because they were expected.

Monedas's picture

This economy is the Jack Kavorkian recovery economy.....bitterly, clinging to life ! Monedas 2011 Kavorkian refused assisted suicide option ?

Happy 80th Birthday Raul Castro....Monedas admires Barney Frank slightly more than you !

Don Birnam's picture

What can one expect from a nation when an electorate will repeatedly send a flunky like Anthony Weiner to Washington, cycle after cycle ?

Monedas's picture

What's the story on that Weiner creep ? Was he well hung or something ? Was he trollin' for trouser Trollettes ? He knew his stuff from all angles ? Sounds like he spent a lot of time squatting over and prancing in front of mirrors ! Monedas 2011 I have the distinct advantage of NOT having seen the evidence !

AldoHux_IV's picture

A report to ensure the market to sell off, but not panic-- tempering the idiotic emotions of the market between wink wink setup for QE.

nobusiness's picture

Brokers will use this to ram the market up and use the $6 Billion of POMO.  Then they can go short.  After all it is no fun going to the Hamptons after a loosing day (which we know doesn't happen at the top 4 firms, ever)

Racer's picture

Got to close green, got to close green....

Greeny's picture

Mean while Dollar dropping like a Rock.

Pricing in QE3?


buzzsaw99's picture

Never mind that, look at NFLX go! YEEHAW!

6 String's picture

Okay, the R2K isn't even down a percent today. Amazing.

alien-IQ's picture

/ES bounced 10 points off low, USD off the cliff heading below 74...E/U into preposterous territory (because Greece is getting another bailout? or being foreclosed on? or some shit like that...)...and GS up $6 since news of investigation broke this week...makes perfect sense to me.

nobusiness's picture

It is not about making sense.  It is about Wall Street taking our money one economic report at a time.


Good is bad bad is good.  Mean while the average Joe is fucked.

Racer's picture

Def looks like PPT out in full force today, was a serious risk of a breakdown and can't have shares go down... I mean to say, allow that to happen when banksters have free money to push them higher and kill any who dare to short reality?

Caviar Emptor's picture

Services: Two UK banks today (RBS, Lloyd's) announced that they've reduced headcount by 103,000 since 08 (!)

carbonmutant's picture

Increasing unemployment apparently lacks relevance.

Market rallying on ISM news...

6 String's picture

On Yahoo! it still says "stocks sharply lower on dismal jobs number."

See? A mere half of 1% decline is "sharply" lower. Must not have volitility, must not be taken off life support, must not go off the prozac, must keep every move in market as safe as a placedo....

Bay of Pigs's picture

Much like yesterday when people said gold was "crashing".

I see a $1540 London PM fix. One dollar from it's all time high. Comical.

nobusiness's picture

The gap from yesterdays low has been closed (SPY, IYR, IWM, XRT).  Market can continue down now after 11AM.

Hondo's picture

The ISM Service Index is really kind of a bogus index anyway........all the components are pretty worthless except is there more demand for my services or not.  The inventory number???? How do you really inventory services???? Same and even more so with order backlogs????  It's really pretty worthless and has little more than zero value content.

Monedas's picture

In a whore house you count the tits and divide by a factor of two ! Monedas 2011 Comedy Jihad World Humour Inventory

JollyRoger's picture

Sell in June, until QE3 when commodities go to the moon!

jtmo3's picture

Flat to green by days end. It's a jobless recovery. Printing press still has electricity and working fine due to the cheap labor in China.

jtmo3's picture

Anyone else notice that the banks are about the only thing green so far today? FUBAR!

Cdad's picture

The banks, being the plague infested group that they are, are ALWAYS the last group to have a positive move.  When short covering is complete in that group, then comes the Screaming and Plunging phase of the market ride.

Monedas's picture

Barney Frank's tonsils are green ! It's a chronic yeast infection ! Monedas 2011 Comedy Jihad Humour Services

Clowns on Acid's picture

Regardless of what Ben the Bullshiiter says, the Bullshit level has kept pace with inflation. A 100% correlation.

Proof = MSM editorial bias (1984 doublespeak) toward non existent growth, and the ISM report being hijacked by the left wing fascists controlling the "message".

Does one have to stretch one's imagination that far to understand that 'lil Timmy and his undersized and overwrought crew of mental lilliputians get the ISM (or any figures) before they are published to the unwashed masses?


White.Star.Line's picture

There are many factors that contributed to the "across the board" commodity price increases:

Bad weather
Volcanic Eruptions
Polar Shifts
Approaching comets
Oh, did I mention speculators?

Anything except for exponential monetization of debt is an acceptable reason.

jimmight's picture

Finding and shorting Chinese frauds is turning into a nice little cottage industry. Soon everybody is going to be looking for their own.
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