And Now We Have A Services Recession: Markit Services PMI Crashes Into Contraction

Tyler Durden's picture

Following this week's ongoing demise of the US manufacturing sector, tumbling to its weakest since October 2012, Markit US Services PMI collapsed into contraction at 49.8, massively below expectations of 53.5. This is the weakest level for the last pillar standing in the US recovery since the government shutdown in 2013, and as Markit even admits, "slumping business confidence and an increased downturn in order book backlogs suggest there’s worse to come."

  • Service providers report least favourable business outlook since August 2010
  • The latest upturn in new work was one of the slowest since the survey began in late-2009.

The last leg of the US recovery stool just broke...


As Markit admits:

The index – which is based on approximately 85% of usual monthly replies – signalled the weakest service sector performance since the government shutdown temporarily disrupted business activity in October 2013. Reports from survey respondents suggested that softer underlying new order growth and uncertainty about the economic outlook had weighed on business activity in February.


“The PMI survey data show a significant risk of the US economy falling into contraction in the first quarter.


The flash PMI for February shows business activity stagnating as growth slowed for a third successive month. Slumping business confidence and an increased downturn in order book backlogs suggest there’s worse to come.

Optimism about the outlook has been on a downward trend over the past two years, with worries about the global economic outlook, financial market volatility, the presidential election and interest rate policy all taking a further toll on business morale in February

While it does not require some PhD-driven leap of economic logic to the man in the street, it appears it never occurs to analysts that when people lose good paying manufacturing jobs they stop spending on services.

Charts: Bloomberg

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Looney's picture

I love Chart Porn, but it ain’t nothing more than the shrink’s inkblot test.

If you stare long enough at an ink stain or a chart, you can find anything you want – markets going off the cliff, perky boobs, a Fibonacci level, or a goat.

You may also end-up seeing Fibonacci himself fucking a goat-bitch with huge teats on the edge of the cliff.  ;-)


Wannabe_Oracle's picture

Well.. With that statement you have pronounced unto the world that you are indeed a 'trump supporter'.. ./ Have a nice day.

Father Thyme's picture
Father Thyme (not verified) Wannabe_Oracle Feb 24, 2016 10:12 AM

Are you being served? ;)

Looney, I love your description of technical analysis. Myself, I constantly note charts showing puffy nipples, but that may reflect on activities in my High School daze.

tarsubil's picture

I stared at the charts last night and saw both an upcoming obvious liftoff and an undeniable plunge in stocks. I laughed.

KnuckleDragger-X's picture

Looney, chart porn is great, but as always, the map is not the territory. The important part is the why, and of course places like CNBC and the other Pravda wannabe's are full Orwell about the truth......

r0mulus's picture

Its a sentiment index. It's useful for getting a broad idea of purchasing managers economic expectations for the coming time periods.
In relative terms, more are feeling more pessimistic about their direct economic futures. It's definitely useful information, as far as it goes...

Infield_Fly's picture
Infield_Fly (not verified) Feb 24, 2016 9:59 AM

Right about now, Yellen has told Barry to fuck right off.


Your socialist utopia self destruct plan Barry is over.  Go clean toilets - it's about all you are good for now Barry you fucking prick.

Father Thyme's picture
Father Thyme (not verified) Infield_Fly Feb 24, 2016 10:13 AM

I wouldn't hire him.

Cognitive Dissonance's picture

I can't wait until everyone blames the Fed's Dec 2015 quarter point interest rate rise on the coming/existing recession/depression. Hilarious.

The herd must have its scapegoat in order to avoid individual/personal responsibility.

BTW Mrs. Cog is cooking up a storm.

Wannabe_Oracle's picture

'Individual Responsibility' - ehh, that's so 80's... ./


A morning will dawn when it becomes rapidly self-evident that what you once knew to be normal is no longer.

Mark Mywords's picture
Mark Mywords (not verified) Wannabe_Oracle Feb 24, 2016 10:14 AM

You're mistaking self-absorption and greed for individual responsibility.

Kinda like how people mistake disgust for the very wealthy for envy.

NoDebt's picture

Not good, man.  Not good.  Markit peddling more fiction.  Beware the wrath of Obama.

Budnacho's picture

The pedals are coming off that Fiction bike rather quickly now aren't they......

NoDebt's picture

It's almost like I've seen this movie before.  Remember GWB in 2007?  "The state of our economy is strong".  Super-fantastic, baby.  Super-fantastic.

NoDebt's picture

"the US recovery stool"

As in shit.  Yes.  And it ain't rainbow-colored Skittles out of a unicorn's ass.  It's the much more common brown, smelly kind.

Bill of Rights's picture

Quick we need a Mass shooting distraction! pick an abortion clinic, School Something! the sheep are waking!...

Lorca's Novena's picture

Wont matter, a Supreme Court Justice was just murdered and I guarantee the teevee crowd completely forgot.

And The upcoming internet tax will fix things for a bit longer anyways as long as the unemployment checks keep coming.

Kprime's picture

will ommamma cry again and write an eo banning bullets over 3mm?

skbull44's picture

So, is bad news good news again yet in this bizarro world??

taketheredpill's picture

All the US workers who lost manufacturing jobs to China will re-train and become high-tech workers...or something like that...who gives a shit did you see how much our fucking earnings rose last year?!

nakki's picture

QE 4ever in 4 months. That'll fix everything for the 10th time, just ask Abe.

NEOSERF's picture

Doesn't matter, oil had slightly more demand so services recession is a by end of day...especially if they can squeeze another oil collaboration on cuts rumor out the door today.

starman's picture

Nah those bartenders and hostesses are helping Billary and Xsanders at campaign headquarters!  

cn13's picture

Ya'll quit peddling fiction.


Early Retirement's picture
Early Retirement (not verified) Feb 24, 2016 11:56 AM

PPT ramped on the news.

cwsuisse's picture

The weakening US Services PMI is an important piece of information. Thank you for that!

r0mulus's picture

Not surprising- with real unemployment at 23% and inflation at ~9%, how could the service sector possibly be thriving?