Markit's Chris Williamson sums up today's Services sector data in three simple words – "Rebound? What Rebound?" With new business expanding at the fastest pace since January but business confidence plumbing record lows, there appears to be total confusion in the Services economy as today's PMI print at 51.4 offers little hope for Q2 GDP. So having said all that, ISM data hit and soared to 56.5 – the highest since Nov 2015 – beating expectations by 5 standard deviations and well above the highest forecast. All subcomponents improved aside from Prices Paid as it seems "baffle 'em with bullshit" economics is back.
Seriously…
With ISM beating expectations by 5 standard deviations…
As if the world were not confused enough by record low bond yields and near record high US equity prices, here are two headlines from today's Services PMI data that sum it all up…
"New business expands at fastest pace since January"
"Business confidence drops to a fresh survey-record low"
So everything is awesome… and the future is terrible? Or as per ISM – everything is awesome again…
ISM respondents are exuberant??
- "Business is generally good and following historical seasonal patterns. Suppliers report being very busy compared to last year." (Management of Companies & Support Services)
- "Business is strong in the private sector; bidding a lot of commercial buildings." (Construction)
- "Slightly greater activity, specifically due to midyear reporting." (Finance & Insurance)
- "Oil prices seem to be stabilizing in the $48/bbl. range which has eased the panic in the industry over falling prices." (Mining)
- "Overall business appears to have flattened out. New business for the next six months looks good according to sales forecasts." (Professional, Scientific & Technical Services)
- "Steady movement with negligible fluctuations both up and down." (Public Administration)
- "Business was slow, but starting to pick up this month." (Retail Trade)
- "More new business." (Utilities)
- "Oil, gas, steel [and] coal mining continues to drag down revenues. Automotive, food, package handling and airports [are] strong." (Wholesale Trade)
- "Overall business conditions are good, even though growth is flat." (Health Care & Social Assistance)
We leave it to Chris Williamson, Chief Economist at Markit, to sum up the mediocrity…
“Rebound, what rebound? The final PMI numbers confirm the earlier flash PMI signal that the pace of US economic growth remained subdued in the second quarter. While volatile official GDP numbers are widely expected to show a rebound from a lacklustre start to the year, the PMIs suggest the underlying malaise has not gone away. The surveys point to an annualized pace of economic growth of just 1% in the second quarter.
“Service sector confidence has slumped to the lowest since 2009 alongside ongoing woes in the energy and manufacturing sectors, as well as worries about the outlook amid presidential election uncertainty.
“Hiring has also slowed, though remains surprisingly upbeat. The surveys signal non-farm payroll growth of 150,000 in June, suggesting many companies expect the slowdown to be short-lived.”
via http://ift.tt/29lIJAa Tyler Durden