Recessionary media dynamics 101: "When in doubt, baffle with BS." As expected, Monday's collapse in the manufacturing ISM [4]would need to be offset somewhere, and that somewhere was today's Services ISM which is where the rest of the world decided to dump the "good news." Sure enough ISM just reported a headline number of 54.7, better than both the expected 53.5 and last month's 54.2. This was driven by a better than expected Business Activity/Production index which miraculously soared by 5.8 to 61.2, while New Orders increased to 58.1 from 55.3, and not to mention Imports which had the biggest jump in the month of +6.0 to 55.5 - nothing like reducing your GDP as an indicator of optimism. Where things get very ugly however, was the dump in Employment from 54.9 to 50.3, the lowest since July, and the collapse in prices from 65.5 to 57.0. So much for jobs and margins. But at least it wasn't "Sandy's fault." Overall: nothing to write home about especially in light of all the other recently adverse data.
[5]
The Employment index:
[6]
And from the respondents:
- "Cautiously optimistic is the best way to describe customer sentiment. Revenue continues to remain well below last year, but seems to have finally reached a point of stability. Price pressures are beginning to ease and customer traffic is once again picking up." (Arts, Entertainment & Recreation)
- "We have experienced an estimated 25 percent [increase] in new job orders, and in new hires for services." (Professional, Scientific & Technical Services)
- "Some companies seemed slower to make hiring decisions and/or place new positions on hold due to uncertainty in the economy and political climate." (Management of Companies & Support Services)
- "Worries about global slowdown persist; however, the housing market appears to have hit its lows and is beginning to climb. This is good news for governmental tax base projections." (Public Administration)
- "Hurricane Sandy has impacted our business activity tremendously. This emergency should not be misconstrued as a positive increase in business as usual; we merely facilitated emergency equipment and supplies to be delivered to the affected areas and the emergency responders." (Wholesale Trade)
- "Sales continue to lag, but there are signs of improvement." (Retail Trade)
Source: ISM [7]