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US Non-Manufacturing ISM Beats Modestly As Employment Index Tumbles To Year Lows

Tyler Durden's picture




 

There was a little for everyone in the latest "baffle them with bullshit" economic data report: while the Services ISM popped modestly from the prior 53.5 to 53.7, on expectations of a slight decline to 53.4, something which in itself is bad because it is good, and makes prospects of more outright QE less of a slamdunk, the all important employment index tumbled from 54.2 to 50.8, the lowest print of the Year, and the largest two month slide in the Employment index since March of 2009. Finaly, with half of the Manufacturing ISM indices in contraction territory already, we finally got the first sub-50 print in the Services ISM as well, with the Prices component declining from 53.6 to 49.8: a/k/a contraction, and the biggest 3 month drop in prices paid since December 2008, and the lowest since July 2009.

ISM Jobs component: oops:

The respondents, ebulient for the most part, are in for a very rude awakening shortly:

  • "Q2 will be a strong quarter for us; the building market is starting to wake up." (Construction)
  • "Increased activity and resources related to projects." (Finance & Insurance)
  • "The upswing in consumer confidence has led to increased business." (Arts, Entertainment & Recreation)
  • "While we tend to remain optimistic about the economy, our numbers
    do not show a surge in activity. It appears consumers are maintaining
    their 'let's wait and see' attitude." (Accommodation & Food
    Services)
  • "Business outlook is flat for the remainder of 2012 with emphasis on
    cost containment, restructuring and cost-savings projects."
    (Professional, Scientific & Technical Services)
  • "Business is still strong, but we have seen some softening in growth since mid-March." (Wholesale Trade)

Deflation? What deflation:

COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY

Commodities Up in Price

Airfares (5); Beef* (2); Copper Products; Corrugated; Diesel Fuel (4); #1 Diesel Fuel* (6); Fuel (5); Gasoline* (5); Lumber; Office and Computer Supplies (2); and Paper Products (2).

and ISM Prices Paid (biggest 3 Month drop since Decmeber 2008 and lowest print since July 2009)...

 

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Tue, 06/05/2012 - 10:14 | 2495758 francis_sawyer
francis_sawyer's picture

Shovel Ready Projects!

Motto: "Take this job & 'shovel' it"!

Tue, 06/05/2012 - 10:20 | 2495782 ihedgemyhedges
ihedgemyhedges's picture

And just like mfg ISM, new export orders on service side take a big drop................

Tue, 06/05/2012 - 10:13 | 2495763 slaughterer
slaughterer's picture

Non-man ISM lubed up for QE3 and FB $1001.  The jobs component alone should have the Bernanker with his middle finger above CTRL - P

Tue, 06/05/2012 - 10:15 | 2495770 AssFire
AssFire's picture

Feels like 1933 all over again...

Tue, 06/05/2012 - 10:17 | 2495775 Cursive
Cursive's picture

Optimism?  I was just let go from the auto dealership (owners were pissed that I brought an instance of fraud to their attention).  Anyway, one of the owners told me that the industry outlook and his outlook is for a return to 2008 SAAR numbers.  My take is that it, yes, it will be just like 2008.  Very few saw the approaching cliff.

Tue, 06/05/2012 - 10:43 | 2495843 francis_sawyer
francis_sawyer's picture

Crazy... But I go to this huge upscale gym of about 12,000 members... Huge 'parking lot' is the point I'm driving at (no pun intended)... I swear this parking lot is a lot bigger than many car dealerships...

While walking out to my beatup Ford F-150 last week, I couldn't help but noticing how many brand spanking new cars there were that I passed (most VERY NICE, upscale SUV's & the like ~ something like that grabs your attention ~ Well, at least me, because I haven't carried around a cell phone in 5 years)... It was uncanny, it was like an auto show or something (I thought I'd entered a time warp and entered the body of Robot Trader for a minute)... Somebody is 'out of touch' here, either myself, or a whole tag team of others... It didn't motivate me to change any of my opinions though... Instead, I kept a running tally & tried to figure out how many ounces of gold one could buy with the monthly payments)...

Tue, 06/05/2012 - 10:48 | 2495874 Cursive
Cursive's picture

@francis_sawyer

The dealership has been doing very well the last 2 years.  My explanation is that most car buyers do not take an "equity view" of the car.  We don't so much buy new cars as lease or, if purchasing, "synthetically lease" them.  Can you remember when a 60 month car note was introduced?  Now we have 84 month deals.  Seven years!  There is also a lot of low/no interest financing.  Toyota had 0% on many models the last two months.   Most car buyers love to have new cars and so they are constantly trading and buying and the note is manageable, but never paid off.  Think of it like the house flipping craze of 2005.  How did that end?

Tue, 06/05/2012 - 10:57 | 2495908 francis_sawyer
francis_sawyer's picture

I'd concur 100% with that... I'll guarantee that almost 100% of these vehicles were LEASE jobs... The area is totally populated with federal workers (many black ~ which, before I get junked for that, I only add it into the story to add perspective)... I can only conjecture that the vast majority of ALL these federal workers (notwithstanding race), are under the dubious impression that the economy is doing fine, Obama has his hands firmly on the wheel (in their world), that all they have to do is sit at their desk for 20 years and they'll get a PHAT pension, so why not splurge on a PHAT ride...

Tue, 06/05/2012 - 12:52 | 2496303 Cthonic
Cthonic's picture

Back in the 80's, we would've laughed at anyone wanting an auto loan longer than 24 months.

Tue, 06/05/2012 - 14:20 | 2496670 francis_sawyer
francis_sawyer's picture

& people nowadays laugh at 80's style 'Flock of Seagulls' hairdos... (well ~ I guess I can't argue with that)...

Wed, 06/06/2012 - 15:45 | 2500636 Cthonic
Cthonic's picture

Lolz, well there are far more people sporting the reverse mullet these days; laughed at them then, laugh at 'em now.  Not sure what that has to do with the trend towards casually borrowing in order to finance what are in effect veblen goods, aside from it looks like we live in a nation of posers with bad hair.

Tue, 06/05/2012 - 10:17 | 2495779 LongSoupLine
LongSoupLine's picture

...and the "market" ramps...unfucking real.

Tue, 06/05/2012 - 10:21 | 2495788 slaughterer
slaughterer's picture

Looks like a short squeeze in the US zombie bank brethren (JPM, MS, et al). 

Tue, 06/05/2012 - 10:18 | 2495780 Cognitive Dissonance
Cognitive Dissonance's picture

Baffle them with bullshit.

Tue, 06/05/2012 - 10:21 | 2495784 FieldingMellish
FieldingMellish's picture

Formerly more approriately called NAPalM.

Tue, 06/05/2012 - 10:24 | 2495797 TrainWreck1
TrainWreck1's picture

By noon, an AP newsreader will report this as good news, and stations all across the land will dutifully rebroadcast it.

 

 

Tue, 06/05/2012 - 10:27 | 2495804 razorthin
razorthin's picture

Did you buy some oil or oil services this morning?

Tue, 06/05/2012 - 10:28 | 2495810 toady
toady's picture

I'm almost perfect now...

When I'm SURE it will tank it ramps, and vice versa.

Maybe I should get back in the market!

Tue, 06/05/2012 - 10:32 | 2495821 razorthin
razorthin's picture

Just an oversold snapback.  Good opportunity to pick up the most beaten down commodity related stuff.  I suspect the reaction will be quite weak, but a great trade opp.

Tue, 06/05/2012 - 10:39 | 2495839 Village Smithy
Village Smithy's picture

It's all about short squeezes and stop hunting now. The algos know the market extremely well and they know exactly when to reverse and catch a little "squeeze wave". They also know exactly when the wave will dissipate. An algo doesn't know much but what it does know it knows very well.

Tue, 06/05/2012 - 10:32 | 2495824 Village Smithy
Village Smithy's picture

Jobs, or the lack thereof are no longer important to the economy. We simply print more money and distribute it throughout the land. Hundreds years of hard working people trying to just keep their families fed, who knew the solution was so simple?

Tue, 06/05/2012 - 10:35 | 2495831 BudFox2012
BudFox2012's picture

The only reason the service numbers when higher is that Charlie Sheen has a TV show again, and can afford 2 grams of coke and 5 call girls a night rather than the 1 gram and 1 hooker a night he had been living on...

Tue, 06/05/2012 - 10:35 | 2495832 Unbezahlbar
Unbezahlbar's picture
Full-time jobs are getting harder to find By Eve Tahmincioglu

There are two types of employees that come under the involuntary part-time category: those who are working fewer hours because their present employer cut back hours due to business conditions, and those who just can’t find full-time jobs.

While the number of employees who saw their full-time work schedules cut by their existing employers stayed about even with last month, and declined 8.8 percent from last year; the number of workers who could only find part-time jobs rose about 12 percent to 2.6 million in May, and increased about the same percentage compared to the same month last year.

 

http://lifeinc.today.msnbc.msn.com/_news/2012/06/04/12049830-full-time-j...

Tue, 06/05/2012 - 10:44 | 2495858 GubbermintWorker
GubbermintWorker's picture

A negative 3.4% in employment and they call the direction as "Growing"?????

Tue, 06/05/2012 - 10:46 | 2495867 Snakeeyes
Snakeeyes's picture

The employment is consistent with other indices. But at least ISM isn't negative!

http://confoundedinterest.wordpress.com/2012/06/05/ism-non-manufacturing-index-rises-but-employment-index-falls/

But not falling is hardly something to high five about.

Tue, 06/05/2012 - 10:56 | 2495903 Shizzmoney
Shizzmoney's picture

This is a trilogy about debt. A fifth of American homes are still underwater, consumers are still depressed, and demand -- for homes, for cars, for debt, for stuff -- is still restrained. Every year, we believe the US economy has achieved escape velocity. We use this false belief to rationalize away the need for fiscal or monetary stimulus. Every year, every summer, as if on schedule, we're proved wrong. The spring ends and we see the recovery for what it truly is: a rickety economy, filled with debt and fear, surrounded by economic crises.

Americans consider our economy superheroic, but the vaunted U.S. private sector is not the superhero in these movies. It's the weakling, the endangered victim, the damsel in distress. It still need to be saved, and where are the hero figures most capable of saving it? The Federal Reserve has balked at another round of quantitative easing, and Washington is busy hailing work and productivity while exhibiting neither.

Like any blockbuster disaster film, this series unfortunately appears to have a good deal of iterative potential. Welcome to the Re-re-re-recovery.

http://www.theatlantic.com/business/archive/2012/06/the-us-economy-isnt-just-a-man-made-disaster-film-its-an-epic-trilogy/258081/

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