Head scratcher today on the economic news front as the ISM Services figure slowed down substantially; a 2.4 point drop month over month. This was also a large miss versus expectations – actually it came in lower than the prediction of any of the 69 economists surveyed. While still fully in expansion mode this report is far more important than last week’s ISM Manufacturing report since services make up a lion’s share of economic output in the U.S. Some of the underlying data was also quite weak as well.
The equity market currently could care less about data, as we are firmly in a “it only matters when it matters” moment again – and after a 2 minute selloff, we’re back in the green on the S&P 500 – but this is one to keep an eye on next month to see if there is a rebound. One might also find it curious that $105 oil was a reason to selloff a month ago, but now once more… no one cares.
- U.S. grew less than forecast in March, a sign the biggest part of the economy is trailing the gains in manufacturing. The Institute for Supply Management’s index of non- manufacturing businesses decreased to 57.3 from 59.7 in February. Economists forecast the gauge would fall to 59.5, according to the median estimate in a Bloomberg News survey. A reading above 50 signals growth for about 90 percent of the economy.
- Estimates in the Bloomberg survey of 69 economists ranged from 57.7 to 61. The Tempe, Arizona-based group’s index averaged 56.1 in the five years to December 2007, when the last recession began. It’s averaged 52.9 since the current recovery started in June 2009 through February, trailing the 56 reading on the group’s factory measure during the same period.
- The measure of new orders decreased to 64.1 from 64.4 in February, while the gauge of business activity fell to 59.7 from 66.9. The group’s employment gauge dropped to 53.7 from 55.6 a month earlier. The index of prices paid declined to 72.1 from 73.3.
- The ISM services survey covers industries that range from utilities and retailing to health care, finance and transportation.