Courtesy of Mish.
Diffusion indexes have not matched reality for so long I struggle to remember when they did match hard data.
The latest non-manufacturing ISM and Markit PMI readings, out today, provide another example.
ISM Non-Manufacturing Report-On Business
The payroll report for May was a near-disaster but one would never know it from the ISM report. Actually, one would never know anything from the IMS reports, they have been so overoptimistic for so long.
Econoday Take on ISM
The Econoday take on the ISM report was amusing.
The ISM non-manufacturing index comes in just about as expected, at 56.9 vs Econoday’s consensus for 57.0. This is a very solid rate of growth that reflects strength in business activity (output), at 60.7, and new orders at 57.7. ISM’s sample reported noticeable strength in employment which however, at 57.8, contrasts with last week’s weak employment report for May. Backlogs are also unusually strong in the May report, at 57.0, which helps explain the month’s strength in hiring. The sample is building inventories in a sign of confidence with input costs, which had shown prior pressure, now flat. But this report is far from flat, continuing to point to rates of growth that the actual economy has failed to match.
Econoday Synopsis
- The ISM employment data does not match actual weak hiring in the BLS employment hard data.
- Nonetheless, strong backlogs explain the strong hiring (that did not really happen).
Got That?
