ISM Services Plunges To 13 Month Lows As Post-Weather Bounceback Fades

Tyler Durden's picture

But the post-weather bounce? Markit's Services PMI in May missed expectations and dropped for the 2nd month in a row to its lowest since January. This notched the Composite PMI also down to its lowest since Jan, leaving Markit warning "the US economy has lost some momentum after an initial bounce-back from weather-related weakness at the start of the year." Worst still, ISM Services thenprinted a notably disappointing 55.7 (against 57.0 expectations) - its weakest since April 2014. The breakdown shows weakness across the board with prices rising. Finally, we note that an incredible 75 of 79 'qualified' economists had an ISM Services estimate that was too high... extrapolated hope springs eternal until it is smashed on the shores of reality.

Services PMI - Bounce...dead...

 

Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said:

Slowing service sector growth adds to signs that the US economy has lost some momentum after an initial bounce-back from weather-related weakness at the start of the year.

 

“May’s PMI data showed service sector activity rising to a slightly smaller degree than signalled by the flash reading. Alongside the slowdown in manufacturing, the services PMI points to the weakest pace of US economic growth since January.

 

“While the survey still supports the view that GDP growth looks set to recover after the 0.7% rate of decline seen in the first quarter, the softness of the data raises big question marks for policymakers over the strength of the rebound and whether the economy is losing momentum as it heads into the summer.

 

The strong dollar is clearly hurting, with new orders growth deteriorating in both manufacturing and services. On the other hand, order books growth remained strong enough to encourage firms to take on staff in increasing numbers in May, leading to the largest rise in employment for almost a year. With the job market gains pushing the economy towards full employment, policymakers may consider rate hikes appropriate even in the face of slower growth.”

*  *  *

Then ISM Services collapsed...

 

and the breakdown shows weakness across the board with prices rising.

 

Blame for the weakness runs the gamut:

  • "Avian influenza is causing major issues within the poultry industry. Uncertainty has caused us to adopt a ‘hand-to-mouth’ procurement strategy." (Agriculture, Forestry, Fishing & Hunting)
  • "In most regions, the construction business is picking-up. Weather conditions have helped with this pick-up." (Construction)
  • "Generally everything remains the same, slight increase towards offshore alternatives starting to pick up speed." (Finance & Insurance)
  • "Moderate recovery continues with all signs pointing to rebound in the fourth quarter." (Educational Services)
  • "Current level of new orders is still flat. Expecting uptick in the near future." (Professional, Scientific & Technical Services)
  • "Increased retail sales; stronger housing market; increased employment." (Public Administration)
  • "Business steady, little or no change. Annual year-over-year growth approximately three percent." (Retail Trade)
  • "As expendable income continues to be available [due to] lower gas prices, our business continues to increase. The port congestion is hampering deliveries and is keeping inventories at a lower level than desired on imports." (Wholesale Trade)

 

Charts: Bloomberg

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Oldwood's picture

If there is a momentum, it is not in the positive.

 

Oh, and there has NEVER been a better time to buy.

KnuckleDragger-X's picture

If people won't buy it, you can't sell it. Saint Krugman is very disappointed with the proles.......

Hitlery_4_Dictator's picture

Geee, what do you know Peter Schiff was right again. He has been right since 2002 in everyway, much to the chagrin of TPTB.  He's been right but that doesn't mean TPTB don't fight the truth every step of the way. 

KnuckleDragger-X's picture

Cassandra was the most beautiful of the daughters of Priam and Hecuba, the king and queen of Troy. She was given the gift of prophecy by Apollo, who wished to seduce her; when she accepted his gift but refused his sexual advances, he deprived her prophecies of the power to persuade.

scubapro's picture

 

 

the selling of bunds is awfully helpful for the ecb, that had indicated it was going to buy more before the summertime lull.  

 

--quick sell your bonds (they are so risky you know) and buy more tech/biotech and small caps quick.....thats the sure thing dontchaknow.  /s

 

oil and gold not quite reacting to the falling dollar like one would think.   selling bunds means demand for euros, which is less demand for $....b/c the eu is getting better than US??      nyfed swap line info on Friday may be interesting.

MajorFall's picture

looks like QE 4 eva...

NoDebt's picture

Still comfortably above 50.

Yen Cross's picture

  BTFD on any bad news... These markets are like comedy relief.

madbraz's picture

don't look now, but the bull market has ENDED.

 

as of June 2015, it is over.

KnuckleDragger-X's picture

There is no such thing as bad news. You evidently took the wrong color of pill, so report yourself for fun camp......

Thisisbullishright's picture

Yeah, but the market is UP so none of it FUCKING MATTERS!!

Just buy buy buy you assholes!

 

khakuda's picture

Thumbs up, but it matters because it gives the Fed cover to keep kicking the can on raising rates and the market can keep dancing away like Chuck Prince on ecstasy.

Ajax_USB_Port_Repair_Service_'s picture

For the markets; a drop is good, an increase is good, and unchanged is good. They just have to throw out the number and the market goes up. Beautiful how the algos filled that gap this morning!

Winston Churchill's picture

Fuck the market, all I know is the economy is the most unpredictable I've ever seen.

Lousy Q! for my, biz down -25%, now up 10% yoy/ytd in just two months  of q2.

Talk about volatility.

How about yoou other ZH biz owners ?

q99x2's picture

All "ism's" lack morality.

Space Animatoltipap's picture

Stagflation is right around the corner.

Colonel Klink's picture

Stagflation has been here since 2008.

Osmium's picture

A few more bearish articles should push us to all time highs.

Colonel Klink's picture

LOL, post weather!  I hate to inform everyone but the weather is still taking place, and always will long after we're gone from the face of the planet.

Next line of bullshit please!