15 minutes ago we had a miss from the Markit Service PMI, and now it is the turn of the ISM's non-manufacturing survey to also miss, rising from 55.7 to 56.0, below the 56.4 consensus increase. The reason: trade (both - imports and exports - disappointed with Imports dropping into outright contraction down from 53.5 to 48.0, while employment dipped from 55.3 to 52.7.
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More from Anthony Nieves, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee. "The NMI registered 56 percent in June, 0.3 percentage point higher than the May reading of 55.7 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index increased to 61.5 percent, which is 2 percentage points higher than the May reading of 59.5 percent, reflecting growth for the 71st consecutive month at a faster rate. The New Orders Index registered 58.3 percent, 0.4 percentage point higher than the reading of 57.9 percent registered in May. The Employment Index decreased 2.6 percentage points to 52.7 percent from the May reading of 55.3 percent and indicates growth for the 16th consecutive month. The Prices Index decreased 2.9 percentage points from the May reading of 55.9 percent to 53 percent, indicating prices increased in June for the fourth consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth in June. The majority of respondents’ comments are positive about business conditions and the economy."
Of course, just like last week's all important manufacturing New Orders print, so today the increase in this primary series was all due to seasonal adjustments: unadjusted (and we are talking about a survey response which already has seasonal bias embedded in it) it dropped from 61.0 to 58.5.
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Finally, here are the respondents who after blaming winter, port strikes, drought and flooding have found a new scapegoat or rather scapebird: avian flu.
- "Avian Influenza has significantly impacted business." (Agriculture, Forestry, Fishing & Hunting)
- "Strong Summer in the industry. Supply chain challenges due to the Avian flu." (Arts, Entertainment & Recreation)
- "Health care continues strong even with the looming negative impacts of Obamacare." (Health Care & Social Assistance)
- "Favorable weather is keeping transactions positive, as well as the planting season on schedule. Drought in CA may lead to higher costs. Lower fuel cost are allowing people to travel and eat out more often. GDP is down and employment numbers are still too low. Bird Flu is a big concern and is already affecting chicken costs." (Accommodation & Food Services)
- "The earlier surge this year in new business has slowed and remained constant." (Professional, Scientific & Technical Services)
- "Activity picking up as the federal government nears late Q3 and early Q4 spending." (Public Administration)
- "The overall business outlook remains strong and performance in our market has been very good." (Retail Trade)
- "Our sales are still trending up year-to-date versus last year-to-date." (Wholesale Trade)
Somehow the miss in both the PMI and ISM macro economic data is enough to push the 10Y yield to the highs of the day.
