Services Economy Crashes To Feb 2010 Lows, Confirming Manufacturing Collapse

Tyler Durden's picture

Following last week's disappointing Manufacturing ISM/PMI data, Services PMI printed a six-month-low 50.9 over the weekend "pointing to an annualised GDP growth rate of a mere 1%," according to Markit. Services jobs fell to their weakest since Dec 2014 but the ISM Services data collapsed to 51.4 - lowest since Feb 2010 with new orders imploding to their weakest since Jan 2014.

Another chart to completely ignore...

 

all 71 of the "economists" forecast a higher print...

 

Full ISM Breakdown...

 

As both seasonal and adjusted new orders crashed...

ISM Respondents are mixed...

"Relatively stable August, with no sharp increase or decrease in sales or pricing. Labor availability and cost remains a very high focal point." (Accommodation & Food Services)

 

"Overall, the oil and gas industry remain in [a] ‘wait and watch’ mode. The price of oil has impacted investment considerably." (Construction)

 

"No significant changes to report. Still on track for expansion efforts to begin fourth quarter 2016." (Finance & Insurance)

 

"Still recovering from the current downturn in the renewable energy market which is expected to pick up in the fourth quarter." (Professional, Scientific & Technical Services)

 

"Stable with some increase in construction activity." (Public Administration)

 

"The business environment has softened a bit over the last month. There are now opportunities to fill in the marketplace." (Retail Trade)

 

"Midyear [is a] slow time for us, summer build is over, fall is historically light, holiday peak build September and October for peak time November and December." (Transportation & Warehousing)

 

"Good, but slowing from previous months." (Wholesale Trade)

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

“The weak PMI readings send a downbeat note on economic growth in the third quarter. Taken together, the manufacturing and services PMIs are pointing to an annualised GDP growth rate of a mere 1%, similar to the subdued pace signalled by the surveys throughout the year to date, suggesting that those looking for a strengthening in the rate of economic growth will be disappointed once again.

“With non-farm payroll growth also showing signs of waning in line with the surveys’ employment indicators in August and inflationary pressures remaining subdued, the data flow is leaning towards the Fed staying in “wait and see” mode at its September meeting.

“The slow pace of growth and weak hiring was in turn often linked by companies to growing uncertainty about the economic outlook as the presidential election approaches, suggesting growth could pick up again later in the year.”

The Composite PMI (Manufacturing and Services) suggests considerably weaker GDP growth than the mainstream is hoping for...

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TeamDepends's picture

Hey, at least we can bask in the glow of a historically low 4.9% unemplyment rate. And everyone has health insurance! Utopia* is surely right around the corner.
*Utopia means "no place"

SafelyGraze's picture

That's gross!

Cover Your Cough!

Don't Spread Germs!

Use your sleeve!

https://www.youtube.com/watch?v=eq2kIP56MjY

 

SomethingSomethingDarkSide's picture

Utopia is piloting a Zamboni and running down mangled Central Bankers in a closed rink environment.  Preferably to the sound of 'Everlasting Love', like Billy Madison.

Haus-Targaryen's picture

<- Going to Raise Rates

<- Going to do jack shit

Bobbyrib's picture

Jack shit..until it is time to lower then go negative.

taketheredpill's picture

They raised rates 25bp last December and the Long Bond rallied.  That's the markets way of saying "you've done enough" to slow the economy.  They can hike again if they want to, the Bond market will just rally more...until they hint of additional non-traditional measures.

Anopheles's picture

So,  how's all those minimum wage hikes working out for y'all?

Hohum's picture

In the big economic scheme, that issue is about as important as a pimple on the ass.

RockySpears's picture

But it is one that gets a lot of media attention does it not?

 

RS

Anopheles's picture

Yeah,  that pimple gets infected, causes septicemia (blood poisoning)  puts the person in hospital, and kills them.

Go ahead,  ignore, ridicule and dismiss things which to you, don't matter.  Reality doesn't care what you do or don't BELIEVE. 

Hohum's picture

Yet, you're probably salivating at the prospect of the robot revolution, which makes a minimum wage irrelevant.

Anopheles's picture

You don't get it, do you.  Minimum wage is just the most visible of dozens of like minded "initiatives" (taxes) that all suck the life out of companies and out of the economy.  It's all about redistribution of wealth, which is also redistribution of prosperity. 

A country can't tax itself into prosperity.  But I'm sure you want to try. 

Bemused Observer's picture

Redistribution of wealth is an integral part of a working economy.

What you are likely complaining about is the way it is being done NOW. But a functioning economy is certainly going to redistribute your wealth, and everyone else's. That's how it works. If everyone stashes all their wealth, refusing to part with any, you have NO economic activity. None...zero.

Of course, this doesn't mean that nothing is changing hands...just that it isn't happening as a result of economic activity.

And just to give you a fright, I'll remind you that there ARE other ways of managing society, and if enough people are willing to give them a try, you will be fucked by default.

So, the KEY is to ensure that those unwashed masses have no incentive to try something else. This requires that wealthy folks release enough of their wealth to keep the economy functioning. Like putting gas into your car...without it, you aren't going anywhere, no matter how expensive your car is. But it costs money to fill the tank...money you must part with to stay on the road. You can resent it all you like, but NO ONE will be providing you with free gas, no matter HOW much you paid for that car with your hard work.

And the economy will not be providing 'free gas' for your 'investments'. All your hard work will be for NOTHING if the economy ceases functioning, and your investments will be up on blocks in the driveway..

Bobbyrib's picture

Anopheles has a point. If you are a small business owner and you are not profitting from the government and Fed controlled economy as much as the .01%, are you going to hire more people if the same people profitting off of their policies raise your cost of doing business?

Bobbyrib's picture

So, most of the jobs created are minimum wage jobs and raising the minimum wage makes it less likely those jobs will be created and likely some will be destroyed, but this is a minor issue?

buzzsaw99's picture

was there an upsurge of high-speed trading 15 milliseconds before the report was scheduled to be released as per usual?

SomethingSomethingDarkSide's picture

VIX should obviously be getting sold off!  Dutch Boy is having a tough time plugging Gold and Bond holes in The Dyke however..

sudzee's picture

Caugh , pollen count is high,  caugh, caugh. Everything is just wonderful, caugh , caugh.

indiefunda's picture

THIS IS THE ULTIMATE BUY SIGNAL I WAS WAITING FOR!

Zeusky Babarusky's picture
"indiefunda Sep 6, 2016 10:17 AM

THIS IS THE ULTIMATE BUY SIGNAL I WAS WAITING FOR!"

This is the ultimate Bye Bye signal I was waiting for.

south40_dreams's picture

This is racist! Where's BLM?

Bobbyrib's picture

"Following last week's disappointing Manufacturing ISM/PMI data, Services PMI printed a six-month-low 50.9 over the weekend "pointing to an annualised GDP growth rate of a mere 1%," according to Markit. Services jobs fell to their weakest since Dec 2014 but the ISM Services data collapsed to 51.4 - lowest since Feb 2010 with new orders imploding to their weakest since Jan 2014."

I'm sure the GDP will print a 2.4, then later it will revised/adjusted slightly lower. The Federal Reserve and Federal government should recruit from white collar prisons.

white horse's picture

Who needs manufacturing when we can all be traders.

joego1's picture

Atleast until all the charts turn to flat lines.

SmittyinLA's picture

"Let's shut down coal fired electricity and see what happens"