Courtesy of Mish.
The divergence between the ISM non-manufacturing report and the PMI services report widened considerably today.
The non-manufacturing ISM index rose from 52.9 to 56.5 but the PMI services index rose from 51.3 to 51.4.
At least one of these measures portrays a considerably wrong picture.
Bloomberg Econoday Paints a Rosy Picture
ISM’s non-manufacturing sample is reporting its strongest rates of growth of the year, headlined by a big 3.2 point jump in the composite index to 56.5. New orders are even further above break-even 50 at 59.9 with new export orders up 4 points to 53.0. Employment is also up, 3 points higher at 52.7 in a reading that hints at sizable improvement for Friday’s employment report.
Deliveries are slowing which is a sign of rising demand and inventories are rising in what perhaps hints at restocking and new confidence in the outlook. Business activity, which is a measure of production, is also very strong, at 59.5 which points to strength for the June economy. To keep production up in the month, the sample worked down its backlogs which are in contraction for the first time in more than a year. But the rise in new orders should help fill backlogs back up while the strength in exports underscores global demand for the nation’s technical and managerial services.
This report historically is not volatile which makes June’s gains impressive. The bulk of the nation’s economy may very well be picking up steam heading to the Brexit fallout.
Compare the above comments from Bloomberg Econoday to the the Markit Services PMI.
Markit U.S. Services PMI™ – Final Data
Markit reports “Marginal expansion of U.S. service sector activity in June, while jobs growth eases to 17-month low.”
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