Services Economy Crashes To Feb 2010 Lows, Confirming Manufacturing Collapse

Following last week's disappointing Manufacturing ISM/PMI data, Services PMI printed a six-month-low 50.9 over the weekend "pointing to an annualised GDP growth rate of a mere 1%," according to Markit. Services jobs fell to their weakest since Dec 2014 but the ISM Services data collapsed to 51.4 - lowest since Feb 2010 with new orders imploding to their weakest since Jan 2014.

Another chart to completely ignore...

 

all 71 of the "economists" forecast a higher print...

 

Full ISM Breakdown...

 

As both seasonal and adjusted new orders crashed...

ISM Respondents are mixed...

"Relatively stable August, with no sharp increase or decrease in sales or pricing. Labor availability and cost remains a very high focal point." (Accommodation & Food Services)

 

"Overall, the oil and gas industry remain in [a] ‘wait and watch’ mode. The price of oil has impacted investment considerably." (Construction)

 

"No significant changes to report. Still on track for expansion efforts to begin fourth quarter 2016." (Finance & Insurance)

 

"Still recovering from the current downturn in the renewable energy market which is expected to pick up in the fourth quarter." (Professional, Scientific & Technical Services)

 

"Stable with some increase in construction activity." (Public Administration)

 

"The business environment has softened a bit over the last month. There are now opportunities to fill in the marketplace." (Retail Trade)

 

"Midyear [is a] slow time for us, summer build is over, fall is historically light, holiday peak build September and October for peak time November and December." (Transportation & Warehousing)

 

"Good, but slowing from previous months." (Wholesale Trade)

Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said:

“The weak PMI readings send a downbeat note on economic growth in the third quarter. Taken together, the manufacturing and services PMIs are pointing to an annualised GDP growth rate of a mere 1%, similar to the subdued pace signalled by the surveys throughout the year to date, suggesting that those looking for a strengthening in the rate of economic growth will be disappointed once again.

“With non-farm payroll growth also showing signs of waning in line with the surveys’ employment indicators in August and inflationary pressures remaining subdued, the data flow is leaning towards the Fed staying in “wait and see” mode at its September meeting.

“The slow pace of growth and weak hiring was in turn often linked by companies to growing uncertainty about the economic outlook as the presidential election approaches, suggesting growth could pick up again later in the year.”

The Composite PMI (Manufacturing and Services) suggests considerably weaker GDP growth than the mainstream is hoping for...