Following the big plunge in January, the world's extrapolators have been exuberant over the snap-back from weather-driven anomalies... today, ISM dashed those hopes to some extent as the pace of the v-shaped recovery slowed notably and ISM missed expectations for the 3rd of the last 4 months. While new orders rose, employment fell to its lowest in 9 months. Of course this bad news is just what the doctor ordered and those oh-so-not-front-running algos just lifted stocks to a new all-time record high... imagine if it had missed by even more!
Not much of a pent-up demand driving bounce from the weather...
[3]
If you like your job, you can't keep your job...
[4]
The detailed index breakdown from the report:
[5]
From Bradley Holcomb, chair of the ISM:
"The March PMI registered 53.7 percent, an increase of 0.5 percentage point from February's reading of 53.2 percent, indicating expansion in manufacturing for the 10th consecutive month. The New Orders Index registered 55.1 percent, an increase of 0.6 percentage point from February's reading of 54.5 percent. The Production Index registered 55.9 percent, a substantial increase of 7.7 percentage points compared to February's reading of 48.2 percent. Employment grew for the ninth consecutive month, but at a lower rate by 1.2 percentage points, registering 51.1 percent compared to February's reading of 52.3 percent. Several comments from the panel reflect favorable demand and good business conditions, with some lingering concerns about the particularly adverse weather conditions across the country."
As yes, weather. No matter the temperature though, the goalseeked respondents couldn't be more giddy:
- "Seeing improvement in the overall economy. Hearing strong bookings in residential contractor and home repair work." (Paper Products)
- "First quarter business still strong." (Fabricated Metal Products)
- "Business beginning to heat-up, along with the weather." (Petroleum & Coal Products)
- "Business is good and we are optimistic that orders will continue to come in at a decent pace." (Transportation Equipment)
- "Year starting off very good. Outlook very bright for 2014." (Computer & Electronic Products)
- "Export orders are picking up — volume is improving although pricing, and thus profitability, are still challenged. Domestic business seems to be holding steady despite earlier predicted declines." (Chemical Products)
- "Short supply of hardwood lumber continues to challenge sales' ability to maximize volume targets. Demand is sound." (Wood Products)
- "Weather has created major delays on inbound materials and outbound sales. We need spring." (Food, Beverage & Tobacco Products)
- "Economy is looking positive and commodities are stable." (Machinery)
- "Business continues to improve." (Furniture & Related Products)
Finally, and appropriately enough, the only commodity reported in short supply is Helium.
So whether it was the weather or not doesn't matter - you buy on good news as it confirms your bias and you buy on bad news as it reinforces the Fed's back stop. And why not - the Fed demands it.