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"Services Will Save Us" Meme Collapses As Non-Manufacturing PMI Plunges To 2015 Lows

Tyler Durden's picture




 

While correlation is not causation, one would have to be an ignorant unicorn-worshipper to believe that a collapse in America's manufacturing would not have some follow-through. Following the crash in Manufacturing, Markit reported America's Services economy massively missed expectations and plunged to 53.7, lowest since Dec 2014. New orders plunged to the lowest since January 2015 and employment tumbled. As Markit reports, this is "disappointing  news  for  an  economy which  has  seen the first  US  interest  rate  hike  for almost  a  decade."

 

 

Commenting on the flash PMI  data, Chris Williamson, chief economist at Markit said:

“A lack  of  inflationary  pressures,  slowing  growth and a drop  in  business  confidence to  a  five-year low are  all  disappointing  news  for  an  economy which  has  seen the first  US  interest  rate  hike  for almost  a  decade.  The Fed projections  point  to  a further  four  quarter  point  hikes in  2016,  ut  with  data as weak as these, we’re likely to see a far less aggressive rate hike progression.

 

The    survey    data    are    consistent    with    gross domestic  product  rising  at  an  annualised  rate  of 1.8% in the fourth quarter. That’s down only slightly from  the  2.1%  pace  observed  in  the  third  quarter, but   the   survey   shows   a   more   severe   slowing towards  the  end  of  the  fourth  quarter,  with  an annualised  GDP  growth  rate  of  just  1.4%  indicated for December alone.

 

Hiring remained encouragingly resilient  in the face  of  the  weaker  growth  trend, pointing to  a  non-farm payroll   increase   of   170,000. That’s  below the average  of  201,000  signalled  in  the  preceding  11 months  of  the  year  (and  below  the  official  year-to-date average of 210,000), but still strong.

 

However,  with  business  expectations  about  the  year  ahead  dropping  in  the  service  sector  to  the lowest  since  August  2010,  the  sustained  growth  of  hiring may soon peter out unless demand revives.”

Charts: Bloomberg

 

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Fri, 12/18/2015 - 11:08 | 6939021 Martial
Martial's picture

so now that we've hiked...is bad news bad news again? or is bad news good news because the FED might reverse? Or is....

Fri, 12/18/2015 - 11:19 | 6939090 junction
junction's picture

When a ship sinks, all the people get wet, not just the passengers in first class.

Fri, 12/18/2015 - 11:22 | 6939104 New England Patriot
New England Patriot's picture

Service economy = shuffling dollars made by manufacturing economy.

Fri, 12/18/2015 - 11:47 | 6939238 Consuelo
Consuelo's picture

+++++

Fri, 12/18/2015 - 13:23 | 6939691 7.62x54r
7.62x54r's picture

The US is becoming a standard third world economy.

Resource extraction, agriculture, a service economy to sell food and cheap foriegn made goods, and transport to move this stuff.

And a bloated government parasite class.

Fri, 12/18/2015 - 18:03 | 6940934 TheSecondLaw
TheSecondLaw's picture

And the people in first class are the ones most likely to be in the life boats.

Fri, 12/18/2015 - 11:23 | 6939108 davinci7_gis
davinci7_gis's picture

exactly...the market has been on a sugar high for almost a decade and now the FED is slowly taking away the candy!

Fri, 12/18/2015 - 11:26 | 6939128 New England Patriot
New England Patriot's picture

More like cocaine high.

Fri, 12/18/2015 - 12:11 | 6939368 KnuckleDragger-X
KnuckleDragger-X's picture

Just invert the trend line and it's all shiny forever......

Fri, 12/18/2015 - 11:12 | 6939048 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

Did some shopping at a major department store yesterday afternoon. Seemed like the only staff in the store were the register clerks. No sales staff on the floor at all - in any department. I had several questions, but there was no staff to be found. The week before Christmas? Crazy!

Fri, 12/18/2015 - 11:40 | 6939201 eyesofpelosi
eyesofpelosi's picture

Yet even my local rag newspaper has a headline that claims Local Business Is Booming...

Such bs.

Fri, 12/18/2015 - 11:59 | 6939303 Vinividivinci
Vinividivinci's picture

Wow, you still have local newspapers...how 20th century!

Fri, 12/18/2015 - 12:29 | 6939450 eyesofpelosi
eyesofpelosi's picture

it's a BS rag for sure...MSM all the way.

Fri, 12/18/2015 - 12:14 | 6939378 KnuckleDragger-X
KnuckleDragger-X's picture

Are there mushroom clouds too?

Fri, 12/18/2015 - 12:28 | 6939445 eyesofpelosi
eyesofpelosi's picture

Unfortunately no, but the city built expensive apartments (Nobody are renting) on the top two floors of some new building downtown...population 14,000...view of the Fire Station, Railroad tracks (train every 2 hours), and the local bank...

Fri, 12/18/2015 - 12:33 | 6939478 KnuckleDragger-X
KnuckleDragger-X's picture

Yeah, my local government wants to build a new baseball stadium to house our unicorns, plus revive 'downtown' for the 20th time in fifty years......

Fri, 12/18/2015 - 12:44 | 6939534 eyesofpelosi
eyesofpelosi's picture

In Michigan it is called the Downtown Development Authority (DDS).

They have destroyed my downtown many times too...

BS stores nobody can afford to shop at...bars, restaurants, yoga schools (WTF, this is a PBR swiller town), coffee shops, jewelry stores, and so on...

EVERY darn city and town I've been to seems to follow the same "plan" for downtown revival, so it must, the DDS have some central gov/org source and an evil one at that.

Kalamazoo, MI did the same stupid shit...19+ bars, $1200 a month apartments, yet nowhere to buy groceries for two miles!

Fri, 12/18/2015 - 11:13 | 6939052 Temporalist
Temporalist's picture

Of course the services economy will save us.  Drugs and prostitution for everyone!

Fri, 12/18/2015 - 11:36 | 6939184 eyesofpelosi
eyesofpelosi's picture

When I was in Nevada, even the whores were having a tough time...

Fri, 12/18/2015 - 11:13 | 6939053 madcows
madcows's picture

Who needs services or manufacturing to drive an economy?!

WHEN YOU'VE GOT A VIRTUAL ECONOMY, YOU DON'T NEED ANY OF THAT CRAP!

Fri, 12/18/2015 - 11:35 | 6939182 eyesofpelosi
eyesofpelosi's picture

An idea...

Instead of Sim City (an addictive game BTW)

Somebody should develop Sim Economy...

Oh wait, the FED beat me to it...

Fri, 12/18/2015 - 11:13 | 6939055 MFL8240
MFL8240's picture

Can't envison what data the Yellen and her group were looking at to raise rates?  This shit is truely laghabale to think a few unelected Jewish bankers can do whatever they wish with the US economy is downright dangerous.  

Fri, 12/18/2015 - 12:15 | 6939382 Vlad the Inhaler
Vlad the Inhaler's picture

The rate hike is not the problem, the low rates to begin with are the problem.

Fri, 12/18/2015 - 11:17 | 6939076 FreeNewEnergy
FreeNewEnergy's picture

#fedratehikenotwinning

Fri, 12/18/2015 - 11:19 | 6939085 rsnoble
rsnoble's picture

Service THIS Obama.

Fri, 12/18/2015 - 11:21 | 6939098 Bernoulli
Bernoulli's picture

OT, but what the hell is happening to the VIX?
Totally looks like "the final spasms of a dying bull market" (as David Stockman coined it)

Fri, 12/18/2015 - 11:23 | 6939106 Catalonian Capi...
Catalonian Capitalist's picture

Gartman,

How's that modesty treating you?

 

P.S. Still long I presume?

Fri, 12/18/2015 - 11:26 | 6939131 Vinividivinci
Vinividivinci's picture

I can attest to the fact that here in Montreal, not one fucking ad for retail sales on any job boards...NOT ONE ! I remember a time not to far back when you could easily find a temp job for the Christmas season in a department store or any number of small or medium size retailers...but this year, nothing! That pretty much tells me where retail stands. By the way, if it sucks this hard pre-holidays, I just can't bear to imagine what it's gonna look like in January!...

Fri, 12/18/2015 - 11:33 | 6939169 eyesofpelosi
eyesofpelosi's picture

Here in SE Michigan, it's the same. I'm waiting for the post holiday REALITY to arrive and dreading it.

People here have really embraced a blissful, delusional, haze...

Fri, 12/18/2015 - 12:11 | 6939365 Fullthrottle
Fullthrottle's picture

No wonder somebody,s shooting at motorists on I-94. 

Fri, 12/18/2015 - 12:22 | 6939416 eyesofpelosi
eyesofpelosi's picture

Uhg, again!?

It is still hunting season though, and the stupid deer love hanging out by the highway...

Fri, 12/18/2015 - 11:27 | 6939144 MedicalQuack
MedicalQuack's picture

Yeah, services, that and what I call Excess Scoring of US Consumers.  Many companies found it is easier to "score" and sell the query results about US citizens rather than create jobs for us.  It's a $180 billion dollar a year business.  All they want is your data, so sure you can go work some low paying service job and just fork over your data.  

http://ducknetweb.blogspot.com/2015/09/excess-scoring-of-us-consumers-us.html

 

Fri, 12/18/2015 - 11:42 | 6939211 youngman
youngman's picture

so those waiters and bartenders are not reporting their tips again.....cash is king....who needs to pay taxes with Obama taking care of you...

Fri, 12/18/2015 - 12:14 | 6939377 Vlad the Inhaler
Vlad the Inhaler's picture

In 1968, a burger flipper had to work about 20 minutes to buy the Big Mac.  Today, the burger flipper has to work about 40 minutes to buy the Big Mac.  And forget about burger flipping your way through college.  So no, low paying service jobs will not save us today.

Fri, 12/18/2015 - 12:27 | 6939438 toadold
toadold's picture

A relative of mine has a collection of German porcelain coins made during and after WW I.  Any of his individual coins are worth way more than a US dollar now.  He won't sell because of he's a collector and a history buff. 

I was thinking about those coins and I got to thinking about the information theory of money.  Basically money is considered information. It will have a value stamped or printed on it.  When information becomes corrupt money loses value unless the information is on something that will have an intrinsic value.  Now days all the institutions lie so much that nobody believes anything. Soon even the value of a gold plated tungsten coin will be worth face value at least. 

Fri, 12/18/2015 - 12:45 | 6939535 boeing747
boeing747's picture

If not raise interest rate, fed creditbility will be greatly damaged but under table they will inject extra liquidity to easy pains in the market. They will not "pull it" when dollar is strong and everybody is hoarding cash.

Fri, 12/18/2015 - 13:20 | 6939675 Grandad Grumps
Grandad Grumps's picture

Facebook will become "Fadebook".

That is inflation of one whole letter.

Do NOT follow this link or you will be banned from the site!