Being the major part of the US 'economy' the disappointing performance of the ISM Services (soft data) - printing at 53.9 missing expectations of 55.0 - should be a concern.
Under the covers, the data is a little more worrying than the stil-in-expansion mode headline data miss. New orders, business activity, and perhaps most worrisome, the employment sub-index all slid with the latter at its lowest since May. Combined with the manufacturing PMI, the composite ISM index fell from 55.1 to 54.3 in November. Despite the data, respondents remain optimistic...though tempered by its slow pace.
This is the lowest November print for ISM Services since 2006.
Quite a difference between ISM Services And Manufacturing as the latter seems driven (we suspect) by the epic channel-stuffing from the Auto-industry and the former more reflective of reality...
The last 4 times ISM Manufacturing was so far above Services it marked the turning point in manufacturing and a market correction.
WHAT RESPONDENTS ARE SAYING ...
- "Optimistic fourth quarter in sight." (Information)
- "Slight slowdown in occupancy." (Accommodation & Food Services)
- "Things are improving very slowly." (Finance & Insurance)
- "Business is steady at this time, with little fluctuation from last month." (Health Care & Social Assistance)
- "Regulatory uncertainty is having an effect on consumers who are spending, but not aggressively." (Retail Trade)
- "Business remains steady, with gains in new orders and projections into 2014." (Professional, Scientific & Technical Services)
- "We are clearly seeing a pickup in activity, which began in August." (Wholesale Trade)
Finally for all those algos which got wrong footed with the ADP report suggesting a surge in jobs, while the ISM report shows jobs are sliding, we have one simple binary message:
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