Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Not a good number today on ISM Services today – expected was 57. But you never know how the market is going to react nowadays because often it likes bad news because it means more and more and more QE. Today the initial reaction is pensive however. Aside from the headline, which is a big miss, the employment component is very poor month over month. None of the suborders outside new export orders and prices (which one can debate whether it is good or bad) were good.
Full report here.
"The NMI™ registered 54.4 percent in September, 4.2 percentage points lower than August's reading of 58.6 percent. This indicates continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 55.1 percent, which is 7.1 percentage points lower than the 62.2 percent reported in August, reflecting growth for the 50th consecutive month but at a significantly slower rate. The New Orders Index decreased by 0.9 percentage point to 59.6 percent, and the Employment Index decreased 4.3 percentage points to 52.7 percent, indicating growth in employment for the 14th consecutive month. The Prices Index increased 3.8 percentage points to 57.2 percent, indicating prices increased at a faster rate in September when compared to August. According to the NMI™, 11 non-manufacturing industries reported growth in September. The majority of the respondents' comments continue to be positive; however, there is an increase in the degree of uncertainty regarding the future business climate and the direction of the economy."
WHAT RESPONDENTS ARE SAYING …
- "Overall business conditions are slowing — small manpower decrease of 5 percent." (Construction)
- "Business levels continue to be strong. Shifting from transient to group travelers." (Accommodation & Food Services)
- "Increased activity following summer vacations, but several postponements as well. Clients still unsure about the economy and business costs (e.g., healthcare)." (Professional, Scientific & Technical Services)
- "The federal government's spending is increasing greatly as agencies execute their final budgets and utilize fiscal year 2013 appropriated funds prior to their expiration on September 30th. This has caused a major increase in procurement activity for goods and services. Budgets are uncertain for fiscal year 2014, so some items requiring funding in future years are not being purchased." (Public Administration)
- "Business has leveled off — not much in the way of growth." (Retail Trade)
- "Some pick-up in sequential sales growth, but still flat with last year." (Wholesale Trade)
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
