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Non-Manufacturing ISM Comes Diametrically Opposite To Manufacturing Indicator
Remember rule #1 of central planning: when in doubt, baffle with BS. Sure enough, after a very ugly Manufacturing ISM hit the tape two days ago, today we get a big beat out its sister tracker, the Non-manufacturing ISM, which printed at 53.7 on expectations of a decline from last month's 52.6 to 52.5, in the process topping the highest Wall Street forecast for the August number. Compounding the 'confounding' is that while the mfg Employment indicator dropped, the non-manfucaturing employment rose from 49.3 to 53.7. Perfectly logical? Exactly. At least there was some symmetry in the Prices Paid indicator, which jumped both here as it did two days ago, from 54.9 to 64.3: the largest component bounce of the August series. And finally, whereas the manufacturing respondents were uniformly bearish, those who rely on services are still full of hopium.
- "Markets and customers we serve remain strong and have not caused any adverse impact to our business." (Management of Companies & Support Services)
- "Economy still stagnant. Small jobs keeping us going. Expect some improvement in capital spending in fourth quarter." (Professional, Scientific & Technical Services)
- "Small slowdown in tourism. Commodity prices on the rise." (Arts, Entertainment & Recreation)
- "Budgets are tighter; there are fewer new purchases being pursued that were not planned or budgeted." (Finance & Insurance)
- "Overall conditions continue to be unpredictable. Sales are inconsistent as customers reel to the news of the day, which creates havoc on the supply chain to respond."(Retail Trade)
- "Customers appear to be refocusing their resources on internal costs and efficiencies." (Wholesale Trade)
From the report:
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI™ registered 53.7 percent in August, 1.1 percentage points higher than the 52.6 percent registered in July. This indicates continued growth this month at a slighter faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55.6 percent, which is 1.6 percentage points lower than the 57.2 percent reported in July, reflecting growth for the 37th consecutive month. The New Orders Index decreased by 0.6 percentage point to 53.7 percent. The Employment Index increased by 4.5 percentage points to 53.8 percent, indicating growth in employment after one month of contraction. The Prices Index increased 9.4 percentage points to 64.3 percent, indicating substantially higher month-over-month prices when compared to July. According to the NMI™, 10 non-manufacturing industries reported growth in August. Respondents' comments continue to be mixed, and for the most part reflect uncertainty about business conditions and the economy."
The relevant table:
Finally, confirming that everything is and has been broken, is the market response: two days ago the Mfg ISM miss sent stocks higher on hopes of more NEW QE. Today's beat sent stocks higher on... well... uhm... virtuous cycle?
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well, non-manufacturing includes such services as printing dollars and fraud. both are both being created on an exponential basis.
I wonder how much of the number was really made up from refinancing and subprime auto loans.
Well, we are a service economy now:
"Sweetie, will you stop by the bank after you pick up my clothes from the cleaners. Oh, don't forget to get my morning Starbucks either ok? And be sure to remember to pay the daycare bill. And oh, stop by the nursing home to see your mom. And did you book a hotel room yet for your brother and sister? They're coming in on Delta, but they can just take a taxi from the airport. I've already ordered the catering. Last thing, your attorney and CPA both called. They said your office lease agreement looks just fine and your receptionist said you had 3 messages. She forwarded them to your iPhone but wanted me to tell you personally that the cleaning lady is coming in late tonite and to let the security guard know since he's not normally there when she gets in."
How many times does a conversation like that happen EVERY day??? And how many service jobs are covered there?? How many minimum wage??? How many temporary??? How many have benefits??? How many create exports???? etc etc et f'n c......
How may create wealth?
Election in 2 months ... expect lots and lots of surprize "better than expected's" from this point forward
You are assuming that they want Obama to win. Whoever they think can better serve their interests is who will be elected. They have done such a masterful job of dividing the population in half, based on perceived differences between the two parties, while in reality both parties serve the same interests, not to be confused with your interests or mine, that the smallest nudge can tilt the scale.
The 9% are going to have to save the 90% by killing the 1%.
wow... well said... though I think the 9% estimate is high and I don't think it's really 1%... it's more like .001%.
RT @PimpBillClinton Swear to God, I could sell ice to Eskimos and a ketchup sandwich to a mofo in a white suit. #DNC
RT @PimpBillClinton Speeches aren't the only thing that I go long and strong with, ladies. #DNC #pimphandstrong
RT @PimpBillClinton Just bendin' this country over and making sweet, sweet love to it right now. #DNC
Why worry about winning the game on the field ....if you have controll of the scoreboard.
So bullshit (paper promises) are easier to manufacture than real goods and services? Imagine that.
August is the biggest month for service jobs outside the 30 days between Thanksgiving and Christmas.
August is when kids go back to school, older kids go off to college, and everyone who can takes a last vacation.
After labor day most of the amusement parks, pools, and vacation spots close up sending millions of temporary laborers to the unemployment line.
Reality never usually exists in August. Last year wasa fluke because of the debt ceiling.
Doesn't matter what the stats say, it's all bullish.
http://bullandbearmash.com/chart/standard-poors-500-hourly-september-05-...
It doesn't matter what reality indicates, this market is going up for one last run.
Those that make thier living off the market believe this is the level it belongs at. They have been dead wrong twice. They are going for a third. Each time the market has needed amassive bubble to keep it riding high. This is the last possible bubble, after the government debt bubble, what else is there?
Well ISM is up since 70%+ of jobs are in services... so more and more ``create stuff`` jobs with good salaries, benefits and pensions are transformed into ``Would you want fries with that`` McDonald jobs with crappy salaries, no benefits and no pension...
So.... not so bullish, even if they printed a non-ISM of 150.
Anecdotal evidence supporting inventories rising, but supplier deliveries falling: friends in the expedited freight delivery business are very busy delivering small quantities of supplies to businesses at a premium rate; part of the rising costs for businesses.
I dont see contradictions so much as patterns:
Business Avtivity/Production BOTH POSTED DECLINES
New orders were BOTH FALLING
Prices for BOTH WERE WAY UP - Inflation of course but not inflation of course
Most importantly: The DIRECTION for NON-MFG INVENTORY SENTIMENT is TOO HIGH and the rate of change is enormous as far as % change of a sentiment indicator goes.
My completely rookie assesment is that inflation fooled employers with better than expected sales numbers and it was the rationale for new hires. Of course higher revenues in an inflationary environment does not mean sales volumes are up. Ergo the realization that we bought too much and hired too many too fast for too many of the wrong reasons.
DNC nominates Obama, Draghi says "We spend / print, the US ISM numbers are interpreted as bullish.....all in a 24 hour period....
Buy, buy, buy......I get it ...finally...nothing can go wrong....