Still above water but uncomfortably so is the indication from
September's PMI samples, at a composite 51.0 reflecting a 51.1 monthly
final for manufacturing posted on Tuesday together with today's posting
of the services final at 50.9. Tuesday's manufacturing report was marked
by a sharp drop in export orders with exports in today's services data
falling for a second straight month and at the sharpest rate in five
years of available data. Total new business for the services sample, in
10 years of available data, is also at a record low.
The drop in
orders is making for a scaling back in hiring with this reading for the
services sample posting a sharp contraction and its first contraction
since February 2010. Another record low is input cost pressure with
selling prices also moving lower. Confidence in the outlook is the
second weakest on record.
Anecdotal samples, such as today's
report or Tuesday's ISM data on manufacturing, are clearly picking up a
down move in their samples.
...meanwhile...
ISM's non-manufacturing sample continues to report monthly expansion but
at the lowest rate since August three years ago. September's 52.6
result, like Tuesday's 47.8 disappointment for ISM's manufacturing
index, is well beneath Econoday's consensus range and reflects
significant softness in employment which, at 50.4, is still above 50 and
still indicates net hiring but is down nearly 3 points from August
which is an unfavorable indication for tomorrow's employment report.
New
orders also slowed abruptly in September, down 6.6 points but still
showing tangible growth at 53.7. And new export orders, which are
important for non-manufacturers, also held above 50 with a 1.5 point
gain to a tangibly positive level of 52.0. And total backlog orders are
also a positive, up 5.0 points to 54.0 in a reading that should limit
further slowing in employment and should keep business activity, which
fell more 6 points to 55.2, at a respectable level for the next report
this time next month.
Report after anecdotal report, whether from
the ISM or Markit Economics, are increasingly signaling slowing if not
contraction underway right now, representing a downward pivot from
mid-year. These point to a pending turn lower for definitive data and
risk putting a lid on third-quarter GDP, particularly components outside
of consumer spending.
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