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Non Manfucaturing ISM Beats Expectations On Far Weaker Sub-Headline Data

Tyler Durden's picture




 

Just like last week's ISM beat on ugly core data was boosted by hollow peripheral components such as inventories, so today's Non-Manufacturing ISM was an exercise in pure desperation. While the August print did beat expectations of 51, coming at 53.3, up from 52.7 previously, the biggest increase was in... Prices and Export Orders (rising at 7.6 and 7.5): i.e. margin squeeze resumes. The important stuff: Business Activity and Employment? Both down (-0.5 and -0.9). Also up? Imports. In other words, Exports offset Imports, margins cuts, and less workers. But at least backlogs are up.... Until backlogged orders get cancelled. From the report: " The NMI registered 53.3 percent in August, 0.6 percentage point higher than the 52.7 percent registered in July, and indicating continued growth at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 0.5 percentage point to 55.6 percent, reflecting growth for the 25th consecutive month, but at a slower rate than in July. The New Orders Index increased by 1.1 percentage points to 52.8 percent. The Employment Index decreased 0.9 percentage point to 51.6 percent, indicating growth in employment for the 12th consecutive month, but at a slower rate than in July. The Prices Index increased 7.6 percentage points to 64.2 percent, indicating that prices increased at a faster rate in August when compared to July. According to the NMI, 10 non-manufacturing industries reported growth in August. Respondents' comments remain mixed. There is a degree of uncertainty concerning business conditions for the balance of the year."

Full table:

And as always, the most amusing part of the report: the respondents:

  • "Overall prices paid are increasing, while sales are still slightly behind projections." (Public Administration)
  • "This month we have seen a downward trend in sales activities due to weather and economic conditions." (Construction)
  • "Customer traffic is trending lower, but spending per person continues to increase. Labor cost savings realized through attrition, as fewer replacements are hired. The outlook for the remainder of 2011 is cautiously optimistic, with increased investment in marketing. 'Sticky prices' are keeping operating expenses elevated even as commodity supply eases." (Arts, Entertainment & Recreation)
  • "We had a good first half. Starting to see inflation in many of our input costs. Consumer demand is flat." (Agriculture, Forestry, Fishing & Hunting)
  • "Business is holding, but looking weaker toward fourth quarter." (Professional, Scientific & Technical Services)
  • "Business climate uncertainty is increasing." (Management of Companies & Support Services)

Remember deflation? Not here.

Commodities Up in Price

Abrasives; Airfares* (9); Aluminum Based Products; Automobile Starters; Carbon Steel Plate; Computer and Peripherals; Copper Based Products; Cotton*; D-Limonene; #1 Diesel Fuel*; #2 Diesel Fuel* (14); Food and Beverage; Freight Charges; Fuel (20); Gasoline* (11); Gloves; Healthcare Related; Labor; Latex Gloves; Petroleum Products (8); Plastic Resins; Rental Equipment; Repair Parts; Resin Products; Soy Oil; 3/4-Ton Pickup Trucks (4X4); and Transmissions/Heavy Duty Vehicles.

Commodities Down in Price

Airfares*; Cotton*; #1 Diesel Fuel*; #2 Diesel Fuel*; and Gasoline* (3).

 

And so on. We expect the market to realize this data was about as bad as last week's Mfg ISM, not to mention does nothing for the global insolvency, within a few hours.

 

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Tue, 09/06/2011 - 10:17 | 1638168 BaBaBouy
BaBaBouy's picture

Imagine ...

If you had your money in Swiss Francs, your down 9% in 24 hrs.

Conversly if you had your money in GOLD, your up about 2% in that time.

Tue, 09/06/2011 - 10:18 | 1638175 Motley Fool
Motley Fool's picture

And if you are a Swiss citizen with gold, you just wen't up 10%. :P

Tue, 09/06/2011 - 10:43 | 1638247 Don Birnam
Don Birnam's picture

Just as an aside, we love the smell of incinerated capital in the morning.

http://blogs.wsj.com/marketbeat/2011/09/06/bank-of-america-buffett-premi...

Tue, 09/06/2011 - 10:17 | 1638169 WoodMizer
WoodMizer's picture

It's a TWAP!!!

Tue, 09/06/2011 - 10:21 | 1638179 SheepDog-One
SheepDog-One's picture

Every day theres a headline to scan for keywords to drive the algo's into buy hand over fist mode.

Plus the greatest economist ever known, Obama, is about to give a speech later on how good everything is and annouce $100 billion pot hole repair project. Probably finish markets up +1%.

Tue, 09/06/2011 - 10:27 | 1638207 lizzy36
lizzy36's picture

No matter what Obama propses, it will never make it through the congress.

Side show.

Political granstanding.

Lets see if they can get a CR to keep the fed governement open, by the end of september.

 

Tue, 09/06/2011 - 10:32 | 1638225 youngman
youngman's picture

100 billion...it will be a 1 trillion all union job pothole and sign project....gotta tell the sheeple where all the money is being spent...I wonder what will be the slogan this time.....third times the charm maybe

Tue, 09/06/2011 - 11:14 | 1638345 SilverRhino
SilverRhino's picture

I have to wonder how many algos and HFT engines are starting to put weight into ZH's news.   I guess when we start seeing bullion sellers go from hundreds of K ounces physical PM's to zero in minutes that will tell us.

Tue, 09/06/2011 - 10:20 | 1638185 Fips_OnTheSpot
Fips_OnTheSpot's picture

Do you like Ravioli in cans? :)

Tue, 09/06/2011 - 10:24 | 1638199 Global Hunter
Global Hunter's picture

you just reminded me of late 80s Thrasher magazine, Chef-Boy-Am-I-Hungry.

Tue, 09/06/2011 - 10:26 | 1638205 Arrowhead
Arrowhead's picture

Love it. I also love my sp 1100 puts that i bot for pennies last week.

Tue, 09/06/2011 - 11:03 | 1638315 DeadFred
DeadFred's picture

Pennies? I had to pay $1.70! :(

Tue, 09/06/2011 - 10:26 | 1638206 DefiantSurf
DefiantSurf's picture

I actually have several cases, will be trading them for more gold shortly...

Tue, 09/06/2011 - 10:27 | 1638210 SheepDog-One
SheepDog-One's picture

Beefaroni...in the 10 pound cans please.

Tue, 09/06/2011 - 10:20 | 1638186 RobotTrader
RobotTrader's picture

Gold in all foreign currencies making new highs today, across the board.

http://stockcharts.com/freecharts/candleglance.html?GLD:FXE,GLD:FXY,GLD:...|D

Tue, 09/06/2011 - 10:38 | 1638235 SheepDog-One
SheepDog-One's picture

Gold priced in currencies is completely missing the point....but then again missing the point and the boat entirely is Robos trademark.

Tue, 09/06/2011 - 10:22 | 1638190 Global Hunter
Global Hunter's picture

Price increases!!!!

Tue, 09/06/2011 - 10:23 | 1638194 firstdivision
firstdivision's picture

So what will the excuse be for QE3 if they do not drive down the economic headline prints to recessionary levels?  Will Ben come out and blatantly state that it is to protect bankers pays and bonuses?  I know QE3 will still come down the pipe, the question is what will be the stated catalyst.

Tue, 09/06/2011 - 10:25 | 1638203 SheepDog-One
SheepDog-One's picture

I sure wouldnt be holding my breath for QE3 miracle at this point.

Tue, 09/06/2011 - 10:27 | 1638208 firstdivision
firstdivision's picture

Never underestimate the level of childness that banks will play to make easy money.

Tue, 09/06/2011 - 10:31 | 1638223 SheepDog-One
SheepDog-One's picture

Well, bring it on then. But I dont see it, not with the mad push to keep damage controlling everything. If theyre going for QE, then they'd just let markets slide to ust under 10,000....but they refuse to, and algo-buy back all drop hell we're not even down -200 on todays dismal carnage world-wide.

I think The Messiahs '$100 billion pot hole infrastructure and targeted tax' speech tonite will be QE3. Got to shear the sheep sometime.

Tue, 09/06/2011 - 10:25 | 1638202 hardcleareye
hardcleareye's picture

Love the title....  but shouldn't "MANFUCATURING"  be spelled manfuckaturing?  I know you had a shealtered childhood with loving parents that kept you away from vulgar peers, but Tyler, it's spelled with a K!!!

Love ya HCE

Tue, 09/06/2011 - 10:45 | 1638257 AGuy
AGuy's picture

..Or Non-Manfunctioning

Tue, 09/06/2011 - 10:28 | 1638212 adr
adr's picture

There aren't as many customers but those that are still buying are paying through the nose so we are all still doing fine.

Service costs are going through the roof. Medical costs are surging again. I expect it to cost $500 to see the doctor for a runny nose by the end of the year. 

Tue, 09/06/2011 - 10:36 | 1638233 DefiantSurf
DefiantSurf's picture

I'll look at your nose for $250, payable in gold of course !

 

Tue, 09/06/2011 - 10:29 | 1638214 stateside
stateside's picture

HUI up 2% again, Dow down 2% again - it's obvious the gold and Canadian junior stock run is now taking off with 99% of investors being left behind.

 

statesidereport.com

Tue, 09/06/2011 - 10:30 | 1638220 TradingJoe
TradingJoe's picture

Algos working hard but to no avail :)) volume is well it isn't :))! As I previously said a few times S&P will be @ 875ish to 1050ish, the latter as in "best case"!

Tue, 09/06/2011 - 10:36 | 1638229 SheepDog-One
SheepDog-One's picture

I guess their plan is waiting for a good up day to pile everyone in then take down the markets. Tic toc tic toc Ben what are you gonna do? Time is runnin out there chumpster.

Tue, 09/06/2011 - 10:30 | 1638222 Josh Randall
Josh Randall's picture

Bulls rush in, where Wise men fear to tread...

Tue, 09/06/2011 - 10:36 | 1638232 Global Hunter
Global Hunter's picture

DOW drifting towards down 300pts, CNBC getting a conscience reminding us a few times that this is the worst 3 day start to September ever.

Tue, 09/06/2011 - 10:39 | 1638238 SheepDog-One
SheepDog-One's picture

I feel sorry for the CNBC crew, their caviar stuffed lobster lunch is shaping up to be in a somber mood today.

Tue, 09/06/2011 - 10:39 | 1638239 DefiantSurf
DefiantSurf's picture

How is the FTSE staying flat? Should falling like a sack of ....

 

Tue, 09/06/2011 - 10:40 | 1638242 SheepDog-One
SheepDog-One's picture

Yep, was just looking at that as well...WTF?

Tue, 09/06/2011 - 11:15 | 1638351 Mitzibitzi
Mitzibitzi's picture

Been wondering about that one myself, the past hour. It's broadly tracking the direction and magnitude of Dax / Cac /etc moves but riding a mile above them. What gives?

Tue, 09/06/2011 - 13:32 | 1638764 Dick Darlington
Dick Darlington's picture

It's the horrible data and increased expectations for more QE by BOE circus monkeys. Just like it is everywhere.

Tue, 09/06/2011 - 10:43 | 1638251 scatterbrains
scatterbrains's picture

ot: TD, what happens if you do 2/10/30 vs.  /es spread  5 year chart weekly basis ?

 

Tue, 09/06/2011 - 10:50 | 1638277 SITruth
SITruth's picture

Obama has declared war on the Wall Street banksters. He got Wall Street campaign money to get elected and now he's throwing them under the bus in order to get Main Street votes. There will be no QE3 for Wall Street. The Federal Reserve will attempt another QE round by expansion of bank credit through Fannie Mae and Freddie Mac in an attempt to pump up the housing market. And what will the Wall Street banksters do? They will crash the stock market in an attempt to get Obama to cave on the lawsuits and have free Fed money redirected to them. How will Obama respond? He may let the Wall Street banksters and the stock market collapse because he's a Marxist-Leninist who is using the Saul Alinsky's "Rules For Radicals" playbook. Crash the whole system, take it over, and rebuild it the way you want. And, blame the banks and the Republicans for the collapse. The Wall Street banksters should have hired a few historians instead of all of those quants. Maybe they would have known what Obama's next step would be.

Tue, 09/06/2011 - 11:02 | 1638309 Sequitur
Sequitur's picture

Right on queue: CNBC touting this as "buying opportunity." They are worse than house realtors.

Tue, 09/06/2011 - 11:07 | 1638328 vast-dom
vast-dom's picture

So the shit that couldn't sell and the shit that no one wants is the very same shit that is used to juice the grim data............precisely why powers that be will make any excuse and manipulate any #'s so long as the FUNDUHMENTALS are kept out of sight out of mind.

 

Gotta love it!

Tue, 09/06/2011 - 11:11 | 1638341 kill switch
kill switch's picture

ISM is a a sentiment survey,,, HAHAHAHAHAHAHAHAHAHA

OK with your sentiment today bunky???

 

Tue, 09/06/2011 - 11:23 | 1638370 how to trade ar...
how to trade armageddon's picture

I just took profits on my SPY puts, as US markets seemed unlikely to fall further today. I'll re-load soon. Hope it's been a profitable two days for y'all.

http://how-to-trade-armageddon.com/2011/09/04/playing-greek-chicken/

Tue, 09/06/2011 - 12:45 | 1638634 Temporalist
Temporalist's picture
Europe Manufacturing Shrinks More Than Estimated, Adding to Slowdown Signs

"Europe’s manufacturing industry contracted more than initially estimated in August, adding to signs that the euro region’s recovery is faltering.

A manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region fell to 49 from 50.4 in July, London-based Markit Economics said today. That’s the weakest in two years and below an initial estimate of 49.7 published on Aug. 23. A reading below 50 indicates contraction."

http://www.bloomberg.com/news/2011-09-01/europe-manufacturing-shrinks-mo...

 

German manufacturing may slowdown

"Manufacturing orders in July declined by 2.8 per cent compared to June levels, according to the Economics Ministry."

http://www.iol.co.za/business/international/german-manufacturing-may-slo...

Tue, 09/06/2011 - 13:34 | 1638770 kito
kito's picture

at least the good news is that we havent fallen off the cliff, spiraling into the deflationary abyss....

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