ISM reports contraction in employment and backlogs, and overall weakening of growth in the ISM services index. Prices have been rising for 82 months but the trend is weakening.
Please consider the March 2024 Services ISM® Report On Business® emphasis mine.
Economic activity in the services sector expanded in March for the 15th consecutive month. The sector has grown in 45 of the last 46 months, with the lone contraction in December 2022.
The report was issued today by Anthony Nieves, Chair of the Institute for Supply Management® Services Business Survey Committee: “In March, the Services PMI® registered 51.4 percent, 1.2 percentage points lower than February’s reading of 52.6 percent. The composite index indicated growth in March for the 15th consecutive month after a reading of 49 percent in December 2022, which was the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 57.4 percent in March, which is 0.2 percentage point higher than the 57.2 percent recorded in February. The New Orders Index expanded in March for the 15th consecutive month after contracting in December 2022 for the first time since May 2020; the figure of 54.4 percent is 1.7 percentage points lower than the February reading of 56.1 percent. The Employment Index contracted for the third time in four months with a reading of 48.5 percent, a 0.5-percentage point increase compared to the 48 percent recorded in February.
“The decrease in the rate of growth in March and the decline in the composite index is a result of slower new orders growth, faster supplier deliveries and a contraction in employment. The report continued to reflect growth month over month. Respondents indicated continuing improvement in logistics and the supply chain. Employment challenges remain a combination of difficulties in backfilling positions and/or controlling labor expenses. The Prices Index reflected its lowest reading since March 2020, when the index registered 50.4 percent; however, respondents indicated that even with some prices stabilizing, inflation is still a concern.”
Manufacturing ISM Inches Positive
On April 1, I noted Manufacturing ISM Inches Positive After 16 Months of Contraction
On the stronger ISM data the odds of a Fed rate cut in May vanished, and June shrank.
Job Quits Are Back to Normal
On the jobs front, Quits Are Back to Normal in All Key Job Categories
The employment report for March is out on Friday. The consensus estimate from Bloomberg is 200,000.
If jobs come in that strong, the Fed will not be cutting.
If they want to cut rates, they will Concoct numbers that support such a series of Cuts.
This is all suspicious noise. The data is in no way audited for accuracy. After all, these are Government Data and not subjected to scrutiny.
ISM = Institute for Supply Management. It is a private organization.
The biggest criticism I have read about the ISM is that is a survey that measures up, down, the same instead of a definitive number of how many new orders, percentage of backlogs, etc.
Backlogs contracting and inflation up for both manufacturing and services = stagflation
More and more people are learning to service their own peanut butter and jelly sandwich.
Papadave is gonna make millions off this post. I hope he is long and leveraged full margin
The inflationary depression is rolling right along with only minor speed adjustments.