Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
The ISM Non Manufacturing missed expectations at 52.1 but still remains over 50. If your thesis is the U.S. can decouple from Europe (and the rest of the globe) you’d expect the non manufacturing number and the services number to somewhat diverge. That said, while still expansionary this is the worst number in well over 2 years. New orders fell, as did prices – but employment held in.
As for the market, I don’t think what the numbers matter much today as we’re massively overbought in the short term. The only wildcard today you had to be careful of was if the ECB would do more than a 25 basis point cut which they did not. Also want to highlight the ADP number came in well this morning (>170K) but certainly does not ‘fit’ with the weekly job claims figure which points to a number closer to 80-110K job growth. It might ratchet expectations up for tomorrow’s figure.
Full ISM report here.
“The NMI registered 52.1 percent in June, 1.6 percentage points lower than the 53.7 percent registered in May. This indicates continued growth this month at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 51.7 percent, which is 3.9 percentage points lower than the 55.6 percent reported in May, reflecting growth for the 35th consecutive month. The New Orders Index decreased by 2.2 percentage points to 53.3 percent, and the Employment Index increased by 1.5 percentage points to 52.3 percent, indicating continued growth in employment at a faster rate. The Prices Index decreased 0.9 percentage point to 48.9 percent, indicating lower month-over-month prices for the second consecutive month. According to the NMI, 12 non-manufacturing industries reported growth in June. Respondents’ comments are mixed and vary by industry and company.”
WHAT RESPONDENTS ARE SAYING …
- “General state of business this month is flat, with no changes.” (Construction)
- “Business is steady and an increase over last month, as we begin our peak season.” (Arts, Entertainment & Recreation)
- “We are starting to experience a slowdown from the modest, grinding improvements our market areas have been experiencing of late.” (Finance & Insurance)
- “Patient counts continue to be lower than budget.” (Health Care & Social Assistance)
- “Business is still growing, but there has been a definite slowing in growth.” (Wholesale Trade)
- “We have noticed a slowing of customer counts and sales over the last 30 to 60 days, compared to the same period last year.” (Accommodation & Food Services)
- “Stable business globally, but softening backlog as clients further tighten discretionary spend.” (Professional, Scientific & Technical Services)
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* JUNE 2012 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Manufacturing | Manufacturing | ||||||||
| Index | Series Index Jun |
Series Index May |
Percent Point Change |
Direction | Rate of Change |
Trend** (Months) |
Series Index Jun |
Series Index May |
Percent Point Change |
| NMI/PMI | 52.1 | 53.7 | -1.6 | Growing | Slower | 30 | 49.7 | 53.5 | -3.8 |
| Business Activity/Production | 51.7 | 55.6 | -3.9 | Growing | Slower | 35 | 51.0 | 55.6 | -4.6 |
| New Orders | 53.3 | 55.5 | -2.2 | Growing | Slower | 35 | 47.8 | 60.1 | -12.3 |
| Employment | 52.3 | 50.8 | +1.5 | Growing | Faster | 6 | 56.6 | 56.9 | -0.3 |
| Supplier Deliveries | 51.0 | 53.0 | -2.0 | Slowing | Slower | 3 | 48.9 | 48.7 | +0.2 |
| Inventories | 53.0 | 56.0 | -3.0 | Growing | Slower | 5 | 44.0 | 46.0 | -2.0 |
| Prices | 48.9 | 49.8 | -0.9 | Decreasing | Faster | 2 | 37.0 | 47.5 | -10.5 |
| Backlog of Orders | 47.5 | 53.0 | -5.5 | Contracting | From Growing | 1 | 44.5 | 47.0 | -2.5 |
| New Export Orders | 49.5 | 53.0 | -3.5 | Contracting | From Growing | 1 | 47.5 | 53.5 | -6.0 |
| Imports | 53.5 | 53.0 | +0.5 | Growing | Faster | 7 | 53.5 | 53.5 | 0.0 |
| Inventory Sentiment | 64.5 | 63.0 | +1.5 | Too High | Faster | 181 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 48.5 | 43.5 | +5.0 |
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