And now for the glass half empty part. Following the better than expected jobs report, driven by women job additions and low-paying jobs, we got the non-manufacturing ISM and Factory Orders both of which missed expectations. The ISM dropped from 54.4 to 53.1, below expectations of 54.0, and the lowest since July 2012, with the employment number dropping from 53.3 to 52. Since this number focuses on services, one has trouble footing this with what the BLS said was a jump in jobs in Services sector but one can't have anything. Elsewhere, factory orders dropped 4%, down from a downward revised 1.9% (was +3%), and below expectations of -2.9%, with March durable goods revised even lower from -5.7% to -5.8%. This was the biggest Factory Goods drop since August 2012. Of course, as Joe LaVorgna just said on a TV, it is best to just "ignore" all data that is missing expectations, or not complying with the narrative.
ISM Breakdown:
[4]
Non-mfg ISM charted:
[5]
Factory Orders:
[5]
From the ISM report:
"The NMI™ registered 53.1 percent in April, 1.3 percentage points lower than the 54.4 percent registered in March. This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55 percent, which is 1.5 percentage points lower than the 56.5 percent reported in March, reflecting growth for the 45th consecutive month. The New Orders Index decreased by 0.1 percentage point to 54.5 percent, and the Employment Index decreased 1.3 percentage points to 52 percent, indicating growth in employment for the ninth consecutive month. The Prices Index decreased 4.7 percentage points to 51.2 percent, indicating prices increased at a slower rate in April when compared to March. According to the NMI™, 14 non-manufacturing industries reported growth in April. Respondents' comments remain mostly positive about business conditions. Cost management and revenue pressures are areas of concern for many of the respective companies."
Let's see how they remain "mostly positive" shall we? Because if one actually reads them one sees something different: uniformly negative
- "Similar demand as 2012; demand well-controlled by suppliers. Overall demand trend to become weak." (Agriculture, Forestry, Fishing & Hunting)
- "Continued corporate cost pressures creating greater demand for cost restructuring/productivity work." (Professional, Scientific & Technical Services)
- "Business continues to fluctuate, making it extremely difficult to forecast. Economic uncertainty is clearly a factor that is influencing discretionary spending. Marketing efforts, therefore, are focused mostly on increasing the spend per visit, getting consumers to stay longer at the property as the frequency of repeat business trends down." (Arts, Entertainment & Recreation)
- "Revenue pressures are creating challenges on the expense side of the house." (Finance & Insurance)
- "Reducing costs in healthcare and higher education remains of paramount importance." (Educational Services)
- "We are seeing no real change for our next fiscal year — budgets are still tough with anticipated spend at previous-year levels." (Public Administration)
Source [6]