Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Market got some good news this morning but thus far is not reacting well to it, which is a good short term tell. Non Manufacturing is far more important to the U.S. economy than manufacturing in terms of its influence. Factory orders were also up 0.8% on the day. But thus far the market is being pulled back down to that 1404 level that somehow is a magnet. Also Apple (AAPL) is getting crushed to the tune of 3% as some firm increased margin requirements.
Anyhow onto the ISM – employment sticks out like a sore thumb falling 4.6 pts month over month despite impressive headline and new orders data – hmmm, how much is Sandy related will be interesting to see over coming months; full report here.
“The NMI™ registered 54.7 percent in November, 0.5 percentage point higher than the 54.2 percent registered in October. This indicates continued growth at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 61.2 percent, which is 5.8 percentage points higher than the 55.4 percent reported in October, reflecting growth for the 40th consecutive month. The New Orders Index increased by 3.3 percentage points to 58.1 percent. The Employment Index decreased by 4.6 percentage points to 50.3 percent, indicating growth in employment for the fourth consecutive month but at a slower rate. The Prices Index decreased 8.6 percentage points to 57 percent, indicating prices increased at a slower rate in November when compared to October. According to the NMI™, 11 non-manufacturing industries reported growth in November. Respondents’ comments are mixed; however, the majority of survey respondents reflect a cautious optimism about current economic conditions.”
WHAT RESPONDENTS ARE SAYING …
- “Cautiously optimistic is the best way to describe customer sentiment. Revenue continues to remain well below last year, but seems to have finally reached a point of stability. Price pressures are beginning to ease and customer traffic is once again picking up.” (Arts, Entertainment & Recreation)
- “We have experienced an estimated 25 percent [increase] in new job orders, and in new hires for services.” (Professional, Scientific & Technical Services)
- “Some companies seemed slower to make hiring decisions and/or place new positions on hold due to uncertainty in the economy and political climate.” (Management of Companies & Support Services)
- “Worries about global slowdown persist; however, the housing market appears to have hit its lows and is beginning to climb. This is good news for governmental tax base projections.” (Public Administration)
- “Hurricane Sandy has impacted our business activity tremendously. This emergency should not be misconstrued as a positive increase in business as usual; we merely facilitated emergency equipment and supplies to be delivered to the affected areas and the emergency responders.” (Wholesale Trade)
- “Sales continue to lag, but there are signs of improvement.” (Retail Trade)
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* NOVEMBER 2012 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Manufacturing | Manufacturing | ||||||||
| Index | Series Index Nov |
Series Index Oct |
Percent Point Change |
Direction | Rate of Change |
Trend** (Months) |
Series Index Nov |
Series Index Oct |
Percent Point Change |
| NMI™/PMI™ | 54.7 | 54.2 | +0.5 | Growing | Faster | 35 | 49.5 | 51.7 | -2.2 |
| Business Activity/Production | 61.2 | 55.4 | +5.8 | Growing | Faster | 40 | 53.7 | 52.4 | +1.3 |
| New Orders | 58.1 | 54.8 | +3.3 | Growing | Faster | 40 | 50.3 | 54.2 | -3.9 |
| Employment | 50.3 | 54.9 | -4.6 | Growing | Slower | 4 | 48.4 | 52.1 | -3.7 |
| Supplier Deliveries | 49.0 | 51.5 | -2.5 | Faster | From Slower | 1 | 50.3 | 49.6 | +0.7 |
| Inventories | 47.0 | 46.5 | +0.5 | Contracting | Slower | 3 | 45.0 | 50.0 | -5.0 |
| Prices | 57.0 | 65.6 | -8.6 | Increasing | Slower | 5 | 52.5 | 55.0 | -2.5 |
| Backlog of Orders | 53.5 | 49.0 | +4.5 | Growing | From Contracting | 1 | 41.0 | 41.5 | -0.5 |
| New Export Orders | 48.0 | 47.5 | +0.5 | Contracting | Slower | 2 | 47.0 | 48.0 | -1.0 |
| Imports | 55.5 | 49.5 | +6.0 | Growing | From Contracting | 1 | 48.0 | 47.5 | +0.5 |
| Inventory Sentiment | 62.5 | 64.0 | -1.5 | Too High | Slower | 186 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 42.5 | 49.0 | -6.5 |
* Non-Manufacturing ISM Report On Business® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. Manufacturing ISM Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.
** Number of months moving in current direction.
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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
