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Service PMI Drops To Lowest Level Since January: Job Creation Slows, Input Cost Inflation Surges
Following last week's disappointing manufacturing PMI, today it was Markit's turn to report the June Service PMI, which just came out at 54.8, just under the 54.9 expected, down from 56.0 in May and the lowest reading since January. Additionally, job creation eased to a three-month low while input cost inflation reaches its highest since October 2013. In other words, more bad news for future job prospects and margins.
From the report:
The seasonally adjusted final Markit U.S. Composite PMI™ Output Index
(covering manufacturing and services) posted 54.6 in June, down from
56.0 in May and the lowest reading since January. A softer overall
increase in U.S. private sector business activity reflected weaker
growth contributions from both services activity (54.8 in June, down
from 56.2 in May) and manufacturing output (53.9, down from 55.2).
Adjusted for seasonal influences, the final Markit U.S. Services Business Activity Index registered 54.8 in June, down from 56.2 in May but above the neutral 50.0 threshold for the twentieth successive month. The latest reading pointed to the least marked pace of expansion since January, although the index was only slightly below the average seen since the survey began in late-2009 (55.8).
More on the bad news in the report:
Despite an upturn in new business growth, the latest survey pointed to a reduction in backlogs of work across the service economy for the first time since July 2014. Anecdotal evidence highlighted that ongoing company expansion plans and robust job hiring patterns had contributed to reduced volumes of unfinished work. That said, the rate of employment growth moderated for the first time in 2015 to date and was the weakest since March.
And even more bad news for jobs:
Some service providers noted that reduced optimism regarding the year-ahead business outlook had led to softer rises in payroll numbers at their units. Moreover, the latest survey indicated that the balance of service sector firms expecting an increase in activity over the next 12 months was the second-lowest since July 2014
The dour assessment came from Markit's Chris Williamson who still maintains his 3% Q2 GDP forecast but adds that "although still signalling moderate growth in June, the manufacturing and service sector surveys indicate that the rate of economic expansion has slowed markedly since the start of the quarter, when business was boosted by a rebound from weather related weakness. The loss of growth momentum seen in the surveys means GDP growth could slacken off again in the third quarter and hiring could likewise ease off."
In conclusion, Markit joins the IMF in once again beckoning the Fed to delay rate hikes:
“Fed talk will most likely continue to prepare the ground for rate hikes later this year, but policymakers will want to see firmer evidence that the economy retains healthy growth momentum before taking the plunge and hiking interest rates, especially given ongoing disappointing pay growth and benign inflation.”
Because clearly 6 years after the "recession ended", the only thing preventing the economy from blasting off into escape velocity is the difference between 0.00% and 0.25% fed funds rate.
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I light candles every night in hopes of a hiked tomorrow.
I cannot wait to see the change to the sociey that has been landscaped in Austin, Texas; I'm referring to the mass of Tech Start-Up's, social media firms, and producers of nothing substantial or tangible. Only to witness the scramble to shelter when the rate rises evermore through its financial seasons. Afterall, we have been in an artificially long induced winter with the rates being suppressed so low--let them rise and warm up the landscape.
I just received this unsoliced email - presumably because of my wife's student loans (which are almost paid off). WTF?!
Program for Government, Non-Profits, Tax Exempt, Schools, Medical Industry, Military, Public Service, and more.
Our government recognizes the commitment of Public Service employees by offering a special Public Service Loan Forgiveness (PSLF) program to significantly reduce and in most cases totally eliminate student loan payments for those who are serving in the Public Sector like Non-Profit, Teachers, Nurses, Military, and Government Employees.
This program is designed to help just about everyone who has federal student loans. Parents with parent plus loan there are programs specifically designed for you as well. Call for details. Feel free to forward this to your team and let them take advantage of this opportunity.
We will quickly evaluate which student loan reduction programs are best to lower or even eliminate student loan payments and in many cases save thousands. Whether employees are current with payments, in default, facing wage garnishment or tax offset, we may be able to help. Call 1-800-297-4688 Monday thru Friday 9am-6pm to speak with a representative. We look forward to hearing from you!
Nancy James
Student Loan Specialist
1-800-297-4688
M-F 9am-6pm EST
Didn't see doctors on that list. Robbing from some to redistribute to others. Huh? Who woulda knowed?
Government employees?
I have this funny kind of feeling that this shitshow called the American economy will keep going forever*.
*forever=many decades.
It will go on till it doesn't and the only warning will be all the Wall Streeters suddenly going on vacation all at once...to a non-extraditing country......
Different day, same story.
Same as it ever was...
Bulish
The government told me all is well and they never lie. That is why they have all the police, guns, regulators, enforcers and financial controls. They are smarter, better and more moral than we are. They have absolute geniuses who know how to run everything from energy to barber certification. So, I place my faith and money with them. Whatever they say they need to take, I give them. They do it for our good, not theirs.
Those who do not are not just unintelligent. You are evil and hate your fellow man.
Official unemployment figures are such complete lies that even Hillary would be proud to claim them:
David Stockman looks at 5.5% unemployment:
At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.
By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!
http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its...
I have seen this number before and I need to look at the details but I believe he is correct in the main. Let's just say that anyone who is conscious and paying attention even a bit laughs at the 5.5% (now 5.3%, I believe).
I like his calculation because it looks at the potential labor. When Obamacare split one 38 hour minimum wage job into two 19 hour minimum wage jobs unemployment went down under normal calculations. However, we know it changed not at all and in fact it is much more expensive and complex to hold those two low paying jobs versus one.
This is part of how we fail while government cries, "All is well!".
SPY will turn green today to prove that Greece means nothing and everything is awesome
Here we go. Indexes green by noon.
chinese central bank probably looking at the us fed with awe ...
"Everything is AWESOME! Buy a $7 mocha-frappe-latte and tip your Barista $3! It's only an hour of your income! If everybody does it, we'll all be rich! Break a window! And get back to work!"
I'm breaking two...at the IRS building and I will call it "stimulus". Let's see what reaction I get.