Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Good results out of ISM Non Manufacturing, which represents far more of the U.S. economy than the much more heralded ISM Manufacturing. Not only did results come in above expectation but they improved from the prior month. Markets didn’t react immediately but we are seeing a modest bounce now off this morning’s lows. What we have to watch for now is when markets stop reacting to positive news…
In the key secondary indicators – New Orders +1.8, Employment -1.7, Prices +4.9. So 1 out of 3 there as obviously one would prefer to see prices stay in line and employment improve. But the headline was the main thing here today.
Via ISM:
“The NMI registered 57.3 percent in February, 0.5 percentage point higher than the 56.8 percent registered in January, and indicating continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 62.6 percent, which is 3.1 percentage points higher than the 59.5 percent reported in January, reflecting growth for the 31st consecutive month. The New Orders Index increased by 1.8 percentage points to 61.2 percent, and the Employment Index decreased by 1.7 percentage points to 55.7 percent, indicating continued growth in employment, but at a slower rate. The Prices Index increased 4.9 percentage points to 68.4 percent, indicating prices increased at a faster rate in February when compared to January. According to the NMI, 14 non-manufacturing industries reported growth in February. The majority of comments from the respondents reflect a growing level of optimism about business conditions and the overall economy. There is a concern about inflation, rising fuel prices and petroleum-based product costs.”
WHAT RESPONDENTS ARE SAYING …
- “Year-over-year and month-over-month growth continues. Market conditions improved dramatically.” (Information)
- “Although customer traffic continues to decline, discretionary spending per capita is increasing. There is a bit more confidence regarding current economic conditions, spurring on slightly more aggressive marketing to capture new customers and encourage repeat visits.” (Arts, Entertainment & Recreation)
- “Business is generally flat, but showing signs of improvement.” (Health Care & Social Assistance)
- “Bracing for impact of fuel price increases on delivered commodity prices.” (Educational Services)
- “Optimism is all around, but sales remain sluggish. Activity shows interest, but market [is] very price sensitive.” (Professional, Scientific & Technical Services)
- “Signs are building that things are starting to settle and business is stabilizing. Although orders aren’t increasing rapidly, they are steady and consistent instead of the radical swings of the past two years. We hope that this trend will continue.” (Retail Trade)
- “Demand [is] gradually increasing for most business sectors.” (Wholesale Trade)
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* FEBRUARY 2012 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Manufacturing | Manufacturing | ||||||||
| Index | Series Index Feb |
Series Index Jan |
Percent Point Change |
Direction | Rate of Change |
Trend** (Months) |
Series Index Feb |
Series Index Jan |
Percent Point Change |
| NMI/PMI | 57.3 | 56.8 | +0.5 | Growing | Faster | 26 | 52.4 | 54.1 | -1.7 |
| Business Activity/Production | 62.6 | 59.5 | +3.1 | Growing | Faster | 31 | 55.3 | 55.7 | -0.4 |
| New Orders | 61.2 | 59.4 | +1.8 | Growing | Faster | 31 | 54.9 | 57.6 | -2.7 |
| Employment | 55.7 | 57.4 | -1.7 | Growing | Slower | 2 | 53.2 | 54.3 | -1.1 |
| Supplier Deliveries | 49.5 | 51.0 | -1.5 | Faster | From Slower | 1 | 49.0 | 53.6 | -4.6 |
| Inventories | 53.5 | 47.0 | +6.5 | Growing | From Contracting | 1 | 49.5 | 49.5 | 0.0 |
| Prices | 68.4 | 63.5 | +4.9 | Increasing | Faster | 31 | 61.5 | 55.5 | +6.0 |
| Backlog of Orders | 53.0 | 49.5 | +3.5 | Growing | From Contracting | 1 | 52.0 | 52.5 | -0.5 |
| New Export Orders | 54.5 | 56.5 | -2.0 | Growing | Slower | 7 | 59.5 | 55.0 | +4.5 |
| Imports | 52.0 | 55.0 | -3.0 | Growing | Slower | 3 | 54.0 | 52.5 | +1.5 |
| Inventory Sentiment | 61.5 | 58.5 | +3.0 | Too High | Faster | 177 | N/A | N/A | N/A |
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 46.0 | 47.5 | -1.5 |
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