As expected, last week's manufacturing ISM was a contrived, one time surge. June's Services ISM just printed at 53.3, down from 54.6 in May, and missing expectations of 53.7. As a reminder for the US, which is a 70% service economy, this number is far more indicative of the true direction of the economy. Among the components, there was a decline in the New Orders, Prices, Backlogs, Imports and, huh, Inventories? Yes, the same inventories that accounted for 66% of the Manufacturing ISM surge are dropping here. Of the 17 non-manufacturing industries reporting all reported growth, except for the all too critical Financial & Insurance and the completely irrelevant Health Care & Social Assistance. Oh yes, all commodities except for diesel and gasoline were reported up in price. And now that WTI is almost back to $100, that's about to end shortly. Some deflation. And now, talk of a triple dip recession may resume.
From the respondents:
- "Business is still up, although some softening seen over last month." (Wholesale Trade)
- "Orders are remaining steady, and outlook for this year is positive." (Professional, Scientific & Technical Services)
- "Economic activity continues to be sluggish." (Management of Companies & Support Services)
- "Have yet to see a real spark that ignites new and invigorated business — still seems lethargic and mired in recession-related preventative moves, and no one sees a real improvement ahead." (Public Administration)
- "Commodities coming down in price, which should help stabilize inflation." (Retail Trade)
Commodities Up in Price
Airfares (7); Can Liners (3); Cheese; Chemicals (2); Copy Paper; Cotton Products (10); #1 Diesel Fuel* (9); #2 Diesel Fuel* (12); Food & Beverage; Food Products (2); Fuel (18); Fuel Surcharges (6); Gasoline* (9); Gloves; Latex Gloves (6); Paper (8); Petroleum Products (6); Plastic Products (4); Plastics (3); and Polyethylene Film.
Commodities Down in Price
Cotton; #1 Diesel Fuel*; #2 Diesel Fuel*; and Gasoline*.
Commodities in Short Supply
Fiber Optic Products; Medical Supplies; Plastic Products; Plenum Cable; and Tires.