Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
ISM Services this morning fell quite substantially to a reading of 52.2. As always this report is a much larger representation of the modern U.S. economy versus the more hyped manufacturing report. New orders plummeted. One positive is the uptick in employment but as we have seen in the monthly employment data a lot of that is low wage work in places like bars and restaurants.
Full report here.
“The NMI™ registered 52.2 percent in June, 1.5 percentage points lower than the 53.7 percent registered in May. This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 51.7 percent, which is 4.8 percentage points lower than the 56.5 percent reported in May, reflecting growth for the 47th consecutive month. The New Orders Index decreased by 5.2 percentage points to 50.8 percent, and the Employment Index increased 4.6 percentage points to 54.7 percent, indicating growth in employment for the 11th consecutive month. The Prices Index increased 1.4 percentage points to 52.5 percent, indicating prices increased at a faster rate in June when compared to May. According to the NMI™, 14 non-manufacturing industries reported growth in June. Respondents’ comments are mixed about business conditions depending upon the industry and company. The majority indicate that growth has been slow and incremental; however, it is still better year over year.”
WHAT RESPONDENTS ARE SAYING …
- “Sales increased slightly again for the fourth consecutive month over last year’s sales for the same period. Hiring increased slightly as well.” (Public Administration)
- “Lower revenues due to healthcare reform, causing pressure to cut costs and headcount.” (Health Care & Social Assistance)
- “Business is steady, but profitability is coming from cost savings measures. Some divisions expected to be flat or slightly below expectations.” (Professional, Scientific & Technical Services)
- “Business environment certainty continues to stabilize. Effects on our business lag. We expect as housing and building continue to improve, we will see gains.” (Management of Companies & Support Services)
- “Slow growth — intense downward price pressure from customers.” (Wholesale Trade)
- “The roller coaster ride is not over yet. Customer counts are well below expectations, but overall revenue is higher than expected. The fluctuations are significant, week to week as much as YTD, resulting in problems with accurate forecasting.” (Arts, Entertainment & Recreation)
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* JUNE 2013 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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™ | 52.2 | 53.7 | -1.5 | Growing | Slower | 42 | 50.9 | 49.0 | +1.9 |
| Business Activity/Production | 51.7 | 56.5 | -4.8 | Growing | Slower | 47 | 53.4 | 48.6 | +4.8 |
| New Orders | 50.8 | 56.0 | -5.2 | Growing | Slower | 47 | 51.9 | 48.8 | +3.1 |
| Employment | 54.7 | 50.1 | +4.6 | Growing | Faster | 11 | 48.7 | 50.1 | -1.4 |
| Supplier Deliveries | 51.5 | 52.0 | -0.5 | Slowing | Slower | 6 | 50.0 | 48.7 | +1.3 |
| Inventories | 54.5 | 51.5 | +3.0 | Growing | Faster | 5 | 50.5 | 49.0 | +1.5 |
| Prices | 52.5 | 51.1 | +1.4 | Increasing | Faster | 45 | 52.5 | 49.5 | +3.0 |
| Backlog of Orders | 52.0 | 51.5 | +0.5 | Growing | Faster | 5 | 46.5 | 48.0 | -1.5 |
| New Export Orders | 47.5 | 50.0 | -2.5 | Contracting | From Unchanged | 1 | 54.5 | 51.0 | +3.5 |
| Imports | 53.5 | 49.5 | +4.0 | Growing | From Contracting | 1 | 56.0 | 54.5 | +1.5 |
| Inventory Sentiment | 61.5 | 62.5 | -1.0 | Too High | Slower | 193 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 45.0 | 46.0 | -1.0 |
** Number of months moving in current direction.
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/index.php/the-fund/holdings
