from
(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'.
~





Reply With Quote
Bookmarks