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Thread: 100% of economists get it WRONG ... AGAIN ( ISM Survey )

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    Default 100% of economists get it WRONG ... AGAIN ( ISM Survey )

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    (snip)Non-Manufacturing ISM Plunges Below Prediction of All 73 Economists, New Orders Collapse, Prices Firm; Did Rosenberg Capitulate at the Top?


    The April 2011 Non-Manufacturing ISM plunged 4.5 points to 52.8 from 57.3 The drop was below expected range of all 73 economists in a Bloomberg ISM Survey.

    The range of economists' forecasts in the Bloomberg survey was 54.5 to 59 with the median forecast up a tick to 57.4.

    Tellingly, new orders collapsed by 11.4 points from 64.1 to 52.7. Employment, one of the weaker measures and up only 8 consecutive months fell to 51.9. One more reasonably bad month and services employment will contract.

    Please consider the April 2011 Non-Manufacturing ISM Report On Business®


    Economic activity in the non-manufacturing sector grew in April for the 17th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®



    New Orders

    The 12 industries reporting growth of new orders in April — listed in order — are: Management of Companies & Support Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; Real Estate, Rental & Leasing; Wholesale Trade; Information; Health Care & Social Assistance; Public Administration; Construction; Other Services; and Educational Services. The four industries reporting contraction of new orders in April are: Finance & Insurance; Retail Trade; Professional, Scientific & Technical Services; and Utilities.




    Employment

    Twelve industries reported increased employment, five industries reported decreased employment, and one industry reported unchanged employment compared to March.

    The industries reporting an increase in employment in April — listed in order — are: Arts, Entertainment & Recreation; Mining; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Other Services; Information; Construction; Accommodation & Food Services; Finance & Insurance; Public Administration; Wholesale Trade; and Transportation & Warehousing. The industries reporting a reduction in employment in April are: Real Estate, Rental & Leasing; Educational Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities.

    Prices

    For the second consecutive month, all 18 non-manufacturing industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Arts, Entertainment & Recreation; Construction; Wholesale Trade; Accommodation & Food Services; Finance & Insurance; Transportation & Warehousing; Real Estate, Rental & Leasing; Management of Companies & Support Services; Educational Services; Professional, Scientific & Technical Services; Retail Trade; Public Administration; Information; Health Care & Social Assistance; and Other Services.



    ISM Prices Firm, What About Profits?

    This was a pretty grim ISM report, especially compared to expectations with the median prediction from economists was up not down.

    Unless this report is an outlier, if prices paid remain firm, profits can't. Employment is also suspect and close to contraction.

    One month does not a trend make. However, if this is the start of a directional change, the report does not bode well for GDP, profits, or the unemployment rate.

    Expect Keynesian clowns to howl for more stimulus"(snip)


    The author's points appear to be ...

    - rising prices for business 'inputs' ( like energy, transportation fuel, necessary commodities etc. ) are squeezing profit margins for those businesses

    - ( unsold ) inventory is starting to pile up

    - seeing reduced profit margins and rising inventories, businesses are again becoming 'cautious' about the future ... with one result being a significant decline in the placement of new orders, and another result being a small declines in the hiring of new employees.

    As the author concedes, this latest ISM report may indeed be an 'outlier'. However, if it is not, these ISM results would tend to indicate that the 'seeds' of another economic slowdown have already been 'planted'.

    ~
    Last edited by Melonie; 05-19-2011 at 02:43 AM.

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    Default Re: 100% of economists get it WRONG ... AGAIN ( ISM Survey )

    backed up by the latest ECRI ...

    (snip)"Global Slowdown to Hit by Summer, Even for U.S., Says Achuthan

    The world is headed for an economic slowdown, according to the Economic Cycle Research Institute's (ECRI) Long Leading Index of global industrial growth.

    "It is not country specific, but imagine if you could add up all the activity in factories around the world and see if it was accelerating or decelerating, that is what this indicator is focused on," says Lakshman Achuthan founder and managing director of the research center. "And it has been telling us very clearly, unambiguously, that we have a peak in global industrial growth this summer."

    Take a look at the institute's chart here. The downturn follows in lock-step the fall in short-term indicators like ISM survey and the ECRI's Industrial Commodity Inflation index.

    Also of note in ECRI's recent data is its future inflation gauge, which excludes commodities. This index had been inching up since last year until last month, says Achuthan, when the index dropped two points, or a little less than two percent.

    Why does this matter?

    "There is a linkage in cycles of inflation and cycles in growth," he tells Aaron in the interview above. "Basically, one quarter of the time you can have a downturn in the inflation cycle ahead of a downturn in economic growth."

    As Aaron points out in the interview, Bernanke might have been right in calling inflation "transitory" and those who have been betting on higher rates and inflation should be rethinking those bets."

    The Good And The Bad

    The good news as the slowdown quickly approaches is that Achuthan does not believe another recession is headed our way.

    The bad news is he says "the U.S. economy will not escape" the downturn, but will "participate in it…and in one way, shape or form, it is going to impact this recovery."(snip)

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