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Non-Manufacturing ISM Tumbles, Worst Print Since June, Employment Index Has Biggest Drop Since 2009

Tyler Durden's picture




 

So much for the summer sugar rush. While last month's Non-manufacturing ISM print, and yesterday's Mfg ISM set the stage for a blowout expectation in today's September Non-Manufacturing ISM update, nobody expected a tumble from 58.6 to 54.4, resulting in the biggest miss in the index since April 2011, the lowest print since June 2013 and even the ISM's Nieves reporting that there has been "significant slowing." To be sure, this follows last month's spike to the highest print of the second Great Depression, but the drop shown below, shows this was all largely a one-time aberration. The leading Business Activity index cratered from 62.2 to 55.1 confirming the August spike was merely an a mirage, but what's worse is that the all important Employment Index (and remember: Services are far more important to the US economy than manufacturing) tumbled from 57.0 to 52.7, the lowest print since May, and biggest one month drop since March 2009!

The full breakdown:

From the report:

"The NMI™ registered 54.4 percent in September, 4.2 percentage points lower than August's reading of 58.6 percent. This indicates continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 55.1 percent, which is 7.1 percentage points lower than the 62.2 percent reported in August, reflecting growth for the 50th consecutive month but at a significantly slower rate. The New Orders Index decreased by 0.9 percentage point to 59.6 percent, and the Employment Index decreased 4.3 percentage points to 52.7 percent, indicating growth in employment for the 14th consecutive month. The Prices Index increased 3.8 percentage points to 57.2 percent, indicating prices increased at a faster rate in September when compared to August. According to the NMI™, 11 non-manufacturing industries reported growth in September. The majority of the respondents' comments continue to be positive; however, there is an increase in the degree of uncertainty regarding the future business climate and the direction of the economy."

The crush in the employment index:

Finally, the respondents are increasingly seeing no light at the end of the tunnel, especially in construction and retail:

  • "Overall business conditions are slowing — small manpower decrease of 5 percent." (Construction)
  • "Business levels continue to be strong. Shifting from transient to group travelers." (Accommodation & Food Services)
  • "Increased activity following summer vacations, but several postponements as well. Clients still unsure about the economy and business costs (e.g., healthcare)." (Professional, Scientific & Technical Services)
  • "Business has leveled off — not much in the way of growth." (Retail Trade)
    "Some pick-up in sequential sales growth, but still flat with last year." (Wholesale Trade)

Finally, all those wondering why there was a spike in economic activity in September (and a big drop off currently), this may explain it all:

  • "The federal government's spending is increasing greatly as agencies execute their final budgets and utilize fiscal year 2013 appropriated funds prior to their expiration on September 30th. This has caused a major increase in procurement activity for goods and services. Budgets are uncertain for fiscal year 2014, so some items requiring funding in future years are not being purchased." (Public Administration)

Explains it all.

 

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Thu, 10/03/2013 - 10:26 | 4018172 ihedgemyhedges
ihedgemyhedges's picture

That's why Bernanke didn't taper.  He went to a restaurant in early September and noticed he was the only one there........

Thu, 10/03/2013 - 10:30 | 4018199 Bobbyrib
Bobbyrib's picture

No one wanted to sit next to the "Grey Beard Maniac" as he is called in DC (not really, he is probably called "Savior"). 

Thu, 10/03/2013 - 10:27 | 4018184 Bobbyrib
Bobbyrib's picture

The MSM won't shut up about the government shutdown for 5 minutes, but will not cover the economic shutdown for five whole minutes.

 

  • "The federal government's spending is increasing greatly as agencies execute their final budgets and utilize fiscal year 2013 appropriated funds prior to their expiration on September 30th. This has caused a major increase in procurement activity for goods and services. Budgets are uncertain for fiscal year 2014, so some items requiring funding in future years are not being purchased." (Public Administration)

Wonderful, the assholes with surplus budgets blew through them so the money wouldn't go to "waste" and they could continue to receive the same budget if not more for next year. How unfortunate this government shutdown must be for them.

Thu, 10/03/2013 - 10:31 | 4018205 Mike in GA
Mike in GA's picture

Obama wants the markets to tank and pain to be felt so he can continue to bully the opposition.  He probably called the office that releases these numbers and told 'em to go ahead and tell the truth this time instead of polishing the turd of his economy.

Fuck the media whores, too.

Thu, 10/03/2013 - 10:40 | 4018236 Ying-Yang
Ying-Yang's picture

Most people don't care about the shutdown unless it touches their lives.

The MSM can bitch all they want but "you live by apathy you die by apathy"

It works both ways bitches!

Perfunctoriness

Thu, 10/03/2013 - 11:10 | 4018450 Gamma735
Gamma735's picture

Gandalf: It's the deep breath before the plunge.

Thu, 10/03/2013 - 11:37 | 4018573 Bobportlandor
Bobportlandor's picture

I asked my neighbors illegal alien gardener yesterday  hows business, I see you have gotten rid of all your helpers.

He use to send out a 5 man crew and now down to doing the work himself with one helper.

He said things are bad and soon may have to give up the trade.

 

Thu, 10/03/2013 - 11:48 | 4018619 LaurentDeLyon
LaurentDeLyon's picture

super, bravo, the ECONOMIC Management is splendid !!

Thu, 10/03/2013 - 12:08 | 4018710 Judge Crater
Judge Crater's picture

Even as Paramount was laying off 5% of its workforce, its stock price edged to a new yearly high.  Paramount represents a microcosm of what is wrong with the U.S. economy.  Paramount produces about 4 movies a year.  Including cleaning staff, Paramount claims to have about 2,000 employees after its most recent 5% company layoffs.  Its home entertainment sales (DVD and Blu-ray sales) are down 34%, since people can't buy DVDs of movies you don't make.  Paramount earnings are sinking into the abyss.  There is a total disconnect between the real world and Wall Street analysts.  Movie company executives bet the house on "World War Z," an incomprehensible movie about swarming zombies all over the world.  For a real horror story, Paramount should have made a movie about CitiGroup, a zombie business buried under some $40 trillion of derivatives debt, a bank that lives off bounced check fees and high credit card interest rates.  

Paramount, like the U.S. economy, is going to hell in a handbasket.      

"Shares of Viacom, Paramount’s parent company, rose 1 percent on Tuesday to $84.33, less than $1 shy of a 52-week high."

Layoffs Hit Paramount: 110 Positions Eliminated

12:12 PM PDT 10/1/2013 by Tatiana Siegel, Paul Bond

Headcount reductions will primarily impact finance, human resources, IT, international home media distribution, legal and marketing. Paramount has laid off 110 employees from a broad swath of the studio including its marketing and legal ranks.

According to a memo sent to all employees Tuesday morning, the headcount reductions will also affect finance, human resources, IT and international home media distribution. The studio would not disclose any names or ranks of employees receiving pink slips. Today's cuts eclipse massive layoffs at Paramount in December 2008, when the studio slashed 7 percent of its workforce across all divisions. At the time, Paramount wouldn’t confirm the number of employees who were let go, but it was believed to be about 100. The studio has endured a challenging year at the box office, where its biggest earner -- the Brad Pitt starrer World War Z, which cost more than $190 million -- barely turned a profit despite a $539 million worldwide haul. Among the more high-profile misfires were Michael Bay's Pain and Gain and Hansel & Gretel: Witch Hunters., starring Jeremy Renner and Gemma Arterton.

Paramount's marketing team currently is working on a number of campaigns for films that will be released in the coming months, including awards-season hopeful Nebraska, Jason Reitman's Labor Day, the comedy Anchorman: The Legend Continues and Martin Scorsese's The Wolf of Wall Street. It is unclear how many staffers will be lost within the department. Shares of Viacom, Paramount’s parent company, rose 1 percent on Tuesday to $84.33, less than $1 shy of a 52-week high.

Through the first nine months of Viacom's fiscal year, the conglomerate reported that revenue at its "filmed entertainment" unit dropped 18 percent year-over-year to $3.1 billion. Theatrical was down 9 percent, home entertainment was off 34 percent and TV license fees was down 12 percent. The only subdivision showing growth was "ancillary," up 2 percent. Filmed entertainment also showed an operating loss of $68 million in the first three quarters of its fiscal year, reversing operating income of $12 million during the same frame a year earlier. COO Frederick Huntsberry said the move was necessary "to manage our business with greater speed and flexibility and fully capitalize on opportunities in the global entertainment market." The layoffs come on the heels of reports that NBC Digital began laying off 5 percent of its staff earlier today

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