ISM Non Manufacturing at 53.7 – Better than Expected

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

A good round of economic data today – ADP, unemployment claims, and now ISM Non Manufacturing which seems to have diverged from the export heavy manufacturing report. Today’s reading was 53.7 which was ahead of expectations of 53. New orders were down but employment up, and prices (like with the manufacturing report) up a lot. The market has been on a run all day as the S&P 500 has broken over the top end of the narrowing range outlined yesterday. Full report here.

“The NMI™ registered 53.7 percent in August, 1.1 percentage points higher than the 52.6 percent registered in July. This indicates continued growth this month at a slighter faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55.6 percent, which is 1.6 percentage points lower than the 57.2 percent reported in July, reflecting growth for the 37th consecutive month. The New Orders Index decreased by 0.6 percentage point to 53.7 percent. The Employment Index increased by 4.5 percentage points to 53.8 percent, indicating growth in employment after one month of contraction. The Prices Index increased 9.4 percentage points to 64.3 percent, indicating substantially higher month-over-month prices when compared to July. According to the NMI™, 10 non-manufacturing industries reported growth in August. Respondents’ comments continue to be mixed, and for the most part reflect uncertainty about business conditions and the economy.”

WHAT RESPONDENTS ARE SAYING …

“Markets and customers we serve remain strong and have not caused any adverse impact to our business.” (Management of Companies & Support Services)
“Economy still stagnant. Small jobs keeping us going. Expect some improvement in capital spending in fourth quarter.” (Professional, Scientific & Technical Services)
“Small slowdown in tourism. Commodity prices on the rise.” (Arts, Entertainment & Recreation)
“Budgets are tighter; there are fewer new purchases being pursued that were not planned or budgeted.” (Finance & Insurance)
“Overall conditions continue to be unpredictable. Sales are inconsistent as customers reel to the news of the day, which creates havoc on the supply chain to respond.”(Retail Trade)
“Customers appear to be refocusing their resources on internal costs and efficiencies.” (Wholesale Trade)

ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* AUGUST 2012
	Non-Manufacturing						Manufacturing
Index	Series Index Aug	Series Index Jul	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Aug	Series Index Jul	Percent Point Change
NMI™/PMI™	53.7	52.6	+1.1	Growing	Faster	32	49.6	49.8	-0.2
Business Activity/Production	55.6	57.2	-1.6	Growing	Slower	37	47.2	51.3	-4.1
New Orders	53.7	54.3	-0.6	Growing	Slower	37	47.1	48.0	-0.9
Employment	53.8	49.3	+4.5	Growing	From Contracting	1	51.6	52.0	-0.4
Supplier Deliveries	51.5	49.5	+2.0	Slowing	From Faster	1	49.3	48.7	+0.6
Inventories	52.5	54.5	-2.0	Growing	Slower	7	53.0	49.0	+4.0
Prices	64.3	54.9	+9.4	Increasing	Faster	2	54.0	39.5	+14.5
Backlog of Orders	50.5	44.5	+6.0	Growing	From Contracting	1	42.5	43.0	-0.5
New Export Orders	52.0	51.0	+1.0	Growing	Faster	2	47.0	46.5	+0.5
Imports	49.5	44.5	+5.0	Contracting	Slower	2	49.0	50.5	-1.5
Inventory Sentiment	67.0	59.0	+8.0	Too High	Faster	183	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	49.0	49.5	-0.5

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog