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:
|ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
|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|
|Inventory Sentiment||55.0||57.5||-2.5||Too High||Slower||168||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.
** Number of months moving in current direction.