ISM Services Growth at Fastest Pace in 5 1/2 Years

ecPulse details:

The Institute for Supply Management released today the ISM services index, where the ISM Services index rose in January to 59.4 from the prior reported estimate of 57.1 and well above the expected estimates of 57.2. The services sector expanded in January at the fastest pace since August 2005.

The business activity index rose to 64.6 from 62.9, while the prices paid index rose to 72.1 from 69.5, new orders increased to 64.9 from 61.4, while the employment index rose to 54.5 from 52.6, new export orders slightly eased to 53.5 from 56.0 and imports increased to 53.5 from 51.0.

Source: ISM

ISM Services Strong in December

Strong ISM results, but interesting in that it doesn't point to a follow through on this morning's great ADP services employment jump. ISM detailed:

• "Overall business climate remains reasonably positive." (Management of Companies & Support Services)
• "Pricing pressures are starting to heat up." (Construction)
• "Outlook for 2011 is positive with an increase in spending." (Finance & Insurance)
• "Looks like more budget reductions are coming in the next year." (Educational Services)
• "Cotton prices are moving upward, but prices are being kept in line as the overall Asian market cools somewhat."(Retail Trade)
• "Business picking up for holiday — above expectations." (Transportation & Warehousing)
  

Source: ISM

Global Rebound Taking Form

Investment Postcards via The Big Picture shows that the United States is in fact not trailing the rest of the world (at least in November) in terms of pace of an economic rebound.



Source: Investment Postcards

Services Bouncing Back

But where are the friggin' jobs!

Respondents stated:

• "Sales are still down compared to last year, but showing a slight increase." (Public Administration)
• "Economy still slow for our industry, with very small signs of recovery. Strong downward pricing pressures from customers affecting business." (Professional, Scientific & Technical Services)
• "Some positive growth in comp [comparable] sales over the past 2 to 3 months." (Accommodation & Food Services)
• "Business is picking up ever so slowly, but improving." (Transportation & Warehousing)
  "Generally stable-to-improving demand for our products." (Wholesale Trade)

Source: ISM

Services Sector Expands... Exports Lead the Way

It will be interesting to see what a weaker dollar means to exports on a going forward basis (was this just noise or the start of something?).

What respondents are saying ...

• "General state of the business has not changed in the last three months. The market is still soft for new sales due to financing requirements." (Construction)
• "Business seems to be flat from last month." (Finance & Insurance)
• "Signs that the economy may be improving, but our sector is still flat or declining." (Professional, Scientific & Technical Services)
• "Business activity is generally stable — slightly better than last year." (Accommodation & Food Services)
• "Third quarter is looking profitable with improving confidence and expectations in the economy. Capital expenditures are being approved." (Wholesale Trade)

Source: ISM

ISM Services: So Much for Jobs Growth

At least according to this morning's ISM release. Additional, below is what respondents are saying:

• "In general, sales have increased slightly compared to the same period last year. However, [sales] are still significantly less than the same period two years ago." (Public administration)
• "Continuing to show signs of positive growth." (Construction)
• "Business is pretty stagnant; starting to see price erosion in our selling markets." (Agriculture, Forestry, Fishing & Hunting)
• "Due to general economic conditions, we are finding more aggressive pricing and deals to win business in the competitive marketplace." (Health Care & Social Assistance)
• "We are anticipating a slowdown in the third and fourth quarter of this year, with no signs of recovery for the next few quarters." (Professional, Scientific & Technical Services)
• "Purchasing has been cut back to meet expenses. As a result, some segments of company revenue have been negatively impacted." (Retail Trade)

Mixed.... very mixed.

Source: ISM

Services Industry Expands in July

ISM details:

• "Our business conditions continue to dramatically outpace last year's." (Information)
• "Although unemployment remains high, consumer attitude has improved and translates into higher activity levels for us." (Arts, Entertainment & Recreation)
• "Capital funding remains tight." (Accommodation & Food Services)
• "Concerning forecasts and the instability in markets are continuing our focus on cautiousness." (Retail Trade)
• "We continue to see signs of improvement and a slow jobless recovery.
• We are also seeing a one-time windfall of business as a result of the disaster in the Gulf." (Management of Companies & Support Services)

Source: ISM

ISM Services: Slow Growth

ISM details what respondents are saying:

• "The general upswing in the economy, albeit minor, has had a positive effect." (Arts, Entertainment & Recreation)
• "Pricing pressures continue to increase as we see the economy begin to improve. Orders are still lagging in our industry." (Professional, Scientific & Technical Services)
• "Slow pace, but better than last year at this time." (Accommodation & Food Services)
• Funding issues and cash flow issues continue to affect public sector procurement. Almost all capital acquisitions have been suspended." (Public Administration)
• "We have seen a slight improvement in business activity over the past month." (Wholesale Trade)

Source: ISM

Strength in Servicing

What businesses are saying (per the ISM):

• "Our business continues to grow. We are significantly above last year's pace." (Information)
• "Business is steady right now — not the normal spring for construction, but improving." (Construction)
• "Outlook is still generally flat for the remainder of this year, with signs that orders and activity will be picking up." (Professional, Scientific & Technical Services)
• "Continuing our pattern of cautious optimism. Consumers appear to be coming out of hibernation and willing to spend. We expect that if this trend can remain solid, we'll in turn spend additional dollars to support and drive sales activities." (Retail Trade)
• "Customers' activity is improving in some parts of the country." (Wholesale Trade)
• "We continue to 'staff to volume' in order to control labor and supply costs. Census continues to be low." (Health Care & Social Assistance)

Source: ISM

ISM Services Index Grows at Same Pace

Marketwatch details:

Growth in the U.S. service sector was flat in April, but activity remained at the highest rate in four years, according to the Institute for Supply Management. The ISM non-manufacturing index stayed at 55.4% in April.

Readings over 50% indicate more firms believe business is getting better instead of worse. Economists surveyed by MarketWatch were looking for the index to rise to 56%. In April, 14 of 18 industries were growing. Yet the new orders index fell to 58.2% in April from 62.3% in March. And the employment index dipped to 49.5% in April from 49.8% in March.

ISM details what respondents are saying:

• "Best production/service levels in 24 months." (Wholesale Trade)
• "Selling prices for our products continue to decline." (Mining)
• "The market and other financial indicators point to an improving economy; however, that is being overshadowed by skepticism and lack of confidence. Capital spending is being constrained by concern over the economic view in a post-stimulus era, with double-digit interest rates and mounting debt." (Educational Services)
• "Market shows slight signs of tightening." (Information)
• "Business conditions are improving." (Management of Companies & Support Services)
• "There are signs of improvement which are leading us to be optimistic; however, as prices escalate the stability of the recovery is at risk." (Retail Trade)

Source: ISM

ISM Services Jump

ISM details what respondents are saying:

• "Business conditions have returned to normal (pre-recession). Our business is up significantly since 2009. We are very positive about the upcoming year." (Information)
• "Demand for loans, credit cards, mortgages and equity lending is expected to continue to increase." (Finance & Insurance)
• "Brisk business activity continues as more projects get 'green light.'" (Utilities)
• "Observing some relaxation on several fronts regarding spending and hiring. Still very cautious, but making investments where they make sense." (Retail Trade)
• "Limited funding available for development [and] expansions." (Accommodation & Food Services)
• "The economy appears to be holding its own; however, state and local funding is projected to decrease next fiscal year." (Educational Services)

Source ISM

Services Sector Improves.... Slightly

ISM reported on the services sector this morning (I was traveling, thus the delay). Marketwatch with the details:

The service sectors of the U.S. economy rebounded in January, the Institute for Supply Management reported Wednesday. The ISM non-manufacturing index rose to 50.5% from 49.8% in December. Despite the improvement, the increase was below expectations. Economists were looking the index to rise to 51%. The index had been above 50 for two months in the fall but then slipped under the threshold in November and December. The closely-watched employment index rose to 44.6% in January from 43.6 in December. The employment index has been below 50 since December 2007. It hit a low of 31.1 in November 2008.

Source: ISM

Random Blip or Double Dip?

The ISM Non-Manufacturing Index registered a 48.7 in November, lower than the 50.6 percent registered in October, indicating contraction in the non-manufacturing sector after two straight months of expansion.

What Respondents are Saying per ISM:

• "Capital markets remain very tight; lenders are not releasing funds for development projects, limiting expansion." (Accommodation & Food Services)
• "Fourth quarter still looking grim, but potential upturn for Q1 2010." (Professional, Scientific & Technical Services)
• "No one trusts that the recovery is real. Seems everything and everyone is in a holding pattern." (Public Administration)
• "Business is still flat." (Wholesale Trade)
• "U.S. business remains better than 2007 levels, although it's been through personnel and cost reductions that we are now profitable. Business continues to be about 8 percent below 2008 levels." (Real Estate, Rental & Leasing)

Source: ISM

ISM Services Slowly Expanding

No upside in employment in the ISM Services data that we saw in ISM Manufacturing on Monday. Per the ISM:

WHAT RESPONDENTS ARE SAYING ...

• "General economic tone is still 'wait and see.' Capital outlays are postponed for durable goods." (Health Care & Social Assistance)"Cost-cutting efforts continue." (Transportation & Warehousing)
• "Overall business activity increasing — forecast even better market conditions in the coming months." (Construction)
• "Business climate remains encouraging, but recovery will remain slow in rebounding." (Professional, Scientific & Technical Services)
• "The weakening U.S. dollar contributing to upward pressure on commodity prices." (Wholesale Trade)

Source: ISM

ISM Services Show Signs of Expansion

Some more "yesterday's news" as I once again will be traveling all week... services showed signs of expansion for the first time in a year and although it wasn't unexpected, "the media" stated it was at least a partial cause for yesterday's market bounce. Per the ISM:

WHAT RESPONDENTS ARE SAYING ...

• "Sales are very steady and have risen some each month in the past six months. The bottom is now here." (Construction)
• "Economic recovery turnaround has begun in the financial services sector; however, cautious expense management is still practiced." (Finance & Insurance)
• "Lack of capital available for new project development." (Accommodation & Food Services)
• "Continue to see signs of slow recovery, but customers are still putting orders off until the beginning of 2010." (Professional, Scientific & Technical Services)
• "Inconsistent ... just when things seem to be settling a bit, a new set of pressures develops." (Retail Trade)
• "Improvements seen in prices available for natural gas and other fuels." (Educational Services)

Source: ISM

Contraction is not an Improvement: Services Edition

Bloomberg reports (Bold Mine):

U.S. service industries from retailers to homebuilders contracted last month at the slowest pace in nine months, as measures of new orders and employment improved.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 47 -- higher than forecast -- from 44 in May, according to data from the Tempe, Arizona-based group. Readings less than 50 signal contraction.

The index’s third straight monthly improvement reflects signs of stabilization in housing and consumer spending. That combined with leaner inventories means companies may start expanding output again in coming months. Still, mounting job losses and stagnant wages are likely to restrain some purchases, limiting the impact of any recovery.

Below 50 = Contraction; ISM Non-Manufacturing = 47; What did the services portion of the economy do in June? Contracted.

Source: ISM

Non-Manufacturing Continues Slide

Marketwatch reports:

Business worsened in May in the nonmanufacturing sectors of the U.S. economy for the eighth consecutive month, according to the Institute for Supply Management. The ISM nonmanufacturing index rose to 44% from 43.7% in April. Economists were expecting an increase to 46%. Readings under 50% indicate that most firms say business conditions worsened in May compared with April. The new orders index fell to 44.4% from 47%.

Source: ISM

ISM Services: Contracting at Slower Rate

Business Wire details:

“The NMI (Non-Manufacturing Index) registered 43.7 percent in April, 2.9 percentage points higher than the 40.8 percent registered in March, indicating contraction in the non-manufacturing sector for the seventh consecutive month, but at a slower rate. The Non-Manufacturing Business Activity Index increased 1.1 percentage points to 45.2 percent. The New Orders Index increased 8.2 percentage points to 47 percent, and the Employment Index increased 4.7 percentage points to 37 percent. The Prices Index increased 0.9 percentage point to 40 percent in April, indicating a slightly slower decrease in prices from March. According to the NMI, seven non-manufacturing industries reported growth in April. Respondents’ comments are mixed and they vary by company and industry about economic conditions.”

Source: ISM

ISM Services (December)

Bloomberg reports:

U.S. service industries contracted in December for a third consecutive month as consumers retrenched and the housing slump worsened.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 40.6, higher than forecast, from a record-low 37.3 the prior month, figures from the Tempe, Arizona-based ISM showed today. Readings below 50 signal contraction, and this month’s reading is the second lowest since records started in 1997.

Source: ISM