Wednesday, July 6, 2011

ISM Non Manufacutiring Slightly Below Expectation at 53.3

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While the ISM Manufacturing seems to get all the attention, we've shrunk that part of the economy to a quite small proportion of activity.  Most of the action nowadays is in the services sector, and hence today's ISM number is more applicable to the broader economy.  The reading of 53.3 is still expansionary but the second worst reading in 2011.  A bit below consensus as well, but thus far the market doesn't care as it continues to look forward to the Japan supply chain rebuild and hopes for 3%+ type of GDP in Q3/Q4.  As well as the very healthy outlook for corporations, especially the multinational kind which have increasingly less need for a healthy U.S. economy.

Specific to the ISM report, new orders shrunk relatively dramatically, and employment was flattish.  As with ISM Manufacturing the bright spot is a large drop in prices.

WHAT RESPONDENTS ARE SAYING ...
  • "Business is still up, although some softening seen over last month." (Wholesale Trade)
  • "Orders are remaining steady, and outlook for this year is positive." (Professional, Scientific & Technical Services)
  • "Economic activity continues to be sluggish." (Management of Companies & Support Services)
  • "Have yet to see a real spark that ignites new and invigorated business — still seems lethargic and mired in recession-related preventative moves, and no one sees a real improvement ahead." (Public Administration)
  • "Commodities coming down in price, which should help stabilize inflation." (Retail Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JUNE 2011
  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 53.3 54.6 -1.3 Growing Slower 19 55.3 53.5 +1.8
Business Activity/Production 53.4 53.6 -0.2 Growing Slower 23 54.5 54.0 +0.5
New Orders 53.6 56.8 -3.2 Growing Slower 23 51.6 51.0 +0.6
Employment 54.1 54.0 +0.1 Growing Faster 10 59.9 58.2 +1.7
Supplier Deliveries 52.0 54.0 -2.0 Slowing Slower 15 56.3 55.7 +0.6
Inventories 53.5 55.0 -1.5 Growing Slower 5 54.1 48.7 +5.4
Prices 60.9 69.6 -8.7 Increasing Slower 23 68.0 76.5 -8.5
Backlog of Orders 48.5 55.0 -6.5 Contracting From Growing 1 49.0 50.5 -1.5
New Export Orders 57.0 57.0 0.0 Growing Same 10 53.5 55.0 -1.5
Imports 46.5 50.5 -4.0 Contracting From Growing 1 51.0 54.5 -3.5
Inventory Sentiment 58.5 55.0 +3.5 Too High Faster 169 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 47.0 39.5 +7.5
* Non-Manufacturing ISM Report On Business® data is seasonally adjus

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