NMI Cracks Appear
The non-manufacturing (services) ISM is still growing but prices and new export orders both plunged into contraction. Moreover, 8 out of 18 industries fell into outright contraction.
The Econoday Consensus Estimate was for a slight decline to 55.5 from 55.8 but once again economists were on the optimistic side. ISM reports a reading dip to 53.5. While still growing, this report portends significant, and growing weakness.
Monthly growth is slowing noticeably in ISM’s non-manufacturing sample. The composite index for January fell a sharp 2.3 points to 53.5 from December’s revised 55.8 which is 2 points below the Econoday consensus. Slowing is most apparent in output (as measured by the business activity component) with employment growth also slowing sharply, to 52.1 for a 4.2 point dip. However new orders, at 56.5, remain solidly above breakeven 50 though here to there is slowing, from December’s 58.9. Supplier deliveries, the fourth component of the composite, slowed in the month in a sign of congestion in the supply chain in what is an offsetting positive for the month.
Weakness is signaled by both contraction in import orders, which points to business caution among U.S. businesses, and also for export orders, the result of weak foreign markets and the negative effects of the strong dollar. Input prices, which have been subdued, fell in the month.
Through much of last year, this report was among the most resilient, consistently pointing to steady strength that for the most part proved correct. Today’s declines, along with the dip in the PMI services report released earlier this morning, unfortunately hint at soft growth for the first quarter while this report’s employment index, hitting its lowest point since January last year, points to modest disappointment for Friday’s employment report.
Let’s dive into the NMI Report for more details.
Non-Manufacturing NMI January vs. December
Index | Jan | Dec | PP Change | Direction | Rate of Change | Trend in Months |
---|---|---|---|---|---|---|
NMI® | 53.5 | 55.8 | -2.3 | growing | Slower | 72 |
Business Activity / Production | 53.9 | 59.5 | -5.6 | growing | Slower | 78 |
New Orders | 56.5 | 58.9 | -2.4 | Growing | Slower | 78 |
Employment | 52.1 | 56.3 | -4.2 | Growing | Slower | 23 |
Supplier Deliveries | 51.5 | 48.5 | 3.0 | Slowing | From Faster | 1 |
Inventories | 51.5 | 53.0 | -1.5 | Growing | Slower | 10 |
Prices | 46.4 | 51.0 | -4.6 | Decreasing | From Increasing | 1 |
Backlog of Orders | 52.0 | 50.0 | 2.0 | Growing | From Unchanged | 1 |
New Export Orders | 45.5 | 53.5 | -8.0 | Contracting | From Growing | 1 |
Imports | 46.0 | 49.0 | -3.0 | Contracting | Faster | 2 |
Inventory Sentiment | 61.5 | 64.5 | -3.0 | Too High | Slower | 224 |
Growing Industries
- Finance & Insurance
- Real Estate, Rental & Leasing
- Utilities
- Retail Trade
- Information
- Construction
- Agriculture, Forestry, Fishing & Hunting
- Health Care & Social Assistance
- Management of Companies & Support Services
- Public Administration
Contracting Industries
- Mining
- Educational Services
- Wholesale Trade
- Other Services
- Arts, Entertainment & Recreation
- Accommodation & Food Services
- Transportation & Warehousing
- Professional, Scientific & Technical Services
Entertainment, as well as accommodation and food services are now in contraction. Food service has been a key provider of jobs.
Mike “Mish” Shedlock
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ANOTHER bad month (and week) for rail
WASHINGTON, D.C. – Feb. 3, 2016 – The Association of American Railroads (AAR) today reported weekly U.S. traffic, as well as volumes for January 2016.
Carload traffic in January totaled 968,042 carloads, down 16.6 percent or 192,747 from January 2015. U.S. railroads also originated 1,039,621 containers and trailers in January 2016, up 3.4 percent or 34,523 units from the same month last year. For January 2016, combined U.S. carload and intermodal originations were 2,007,663 down 7.3 percent or 158,224 carloads and intermodal units from January 2015.
…
Total U.S. weekly rail traffic for the week ending Jan. 30, 2016 was 512,746 carloads and intermodal units, down 6.5 percent compared with the same week last year. For the week, there were 248,961 carloads, down 16.6 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 263,785 containers and trailers, up 5.5 percent compared to 2015.
https://www.aar.org/newsandevents/Press-Releases/Pages/2016-02-03-railtraffic.aspx
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ANOTHER bad month for retail
The Thomson Reuters Same Store Sales Index forecast for January 2016 is for 0.2% growth overall and for 0.0% growth excluding the drug store sector. Both figures are significantly lower than January 2015 actual retail growth rate of 1.5% overall and 0.6% ex-drug.
http://lipperalpha.financial.thomsonreuters.com/2016/02/january-retail-sales-outlook-clearance-prices-didnt-help/
…
Can’t quite put my finger on it, but it is almost like the economy trying to say something … maybe it will come to me later …
Thanks
excellent comments
Mish
Are comments working?
I am trying OAUTH via twitter and that seems OK. The basic form doesn’t(email and name)
ANOTHER bad month (week) for rail
WASHINGTON, D.C. – Feb. 3, 2016 – The Association of American Railroads (AAR) today reported weekly U.S. traffic, as well as volumes for January 2016.
Carload traffic in January totaled 968,042 carloads, down 16.6 percent or 192,747 from January 2015. U.S. railroads also originated 1,039,621 containers and trailers in January 2016, up 3.4 percent or 34,523 units from the same month last year. For January 2016, combined U.S. carload and intermodal originations were 2,007,663 down 7.3 percent or 158,224 carloads and intermodal units from January 2015.
…
Total U.S. weekly rail traffic for the week ending Jan. 30, 2016 was 512,746 carloads and intermodal units, down 6.5 percent compared with the same week last year.
https://www.aar.org/newsandevents/Press-Releases/Pages/2016-02-03-railtraffic.aspx
…
ANOTHER bad month for retail
The Thomson Reuters Same Store Sales Index forecast for January 2016 is for 0.2% growth overall and 0.0% growth excluding the ex – drug store sector. Both figures are significantly lower than the January 2015 actual retail growth of 1.5% overall and 0.6% ex – drug.
http://lipperalpha.financial.thomsonreuters.com/2016/02/january-retail-sales-outlook-clearance-prices-didnt-help/
…
Can’t quite put my finger on it … but maybe, just maybe, economy trying to say something … oh well, maybe it will come to me later …
Mine never showed up from mobile
Congrats, Mish, on your new web page! I am a long time follower of your blog! Your blog has been my “go to” blog for what is happening in the economy. As a fun project I started writing a blog, about the time the credit crash started being noticed, Aug 2007, but, fast learned it was a hobby for me, and I was not in the same league as those that I enjoy reading the most. Good luck with “MishTalk!”
WAS LOOKING FOR IMPORT/EXPORT INFORMATON RUSSIA STYLE BUT CAME ACROSS SOMETHING INTERESTING–I THINK.
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THESE STATS COME FROM THE UK CUSTOMS OFFICE – WHAT DOES IT TELL US ABOUT THE UK’S DROP IN BUSINESS WITH BOTH THE USA, CHINA AND RUSSIA? MAYBE IF THERE IS A WAR EXPECTED BETTER TO DO TRADE WITH SOMEONE ELSE?
Partner November 2015
Comparison (Oct 2015)
Exports: £2.7bn
Imports: £5.2bn
10.5%
4.0%
Exports: £3.5bn
Imports: £3.0bn
-14.5%
-7.6%
Exports: £1.5bn
Imports: £3.1bn
0.6%
-19.8%
Exports: £1.5bn
Imports: £2.3bn
-15.1%
12.1%
Exports: £1.3bn
Imports: £2.5bn
-12.4%
-8.6%
Overseas Trade Statistics – Uktradeinfo
http://www.uktradeinfo.com › HOME › Statistics
Uktradeinfo
If you have any questions regarding HMRC Trade Statistics unit or the data we … In November 2015 the value of exports (EU and Non-EU) increased to £25.3 …
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F]EU Trade in the World – Trade Statistics – Europa
trade.ec.europa.eu/doclib/html/122532.htm
Europa
Nov 6, 2015 – Statistics sector … EU-28 imports and exports of goods by trade partner. EU-28 imports and exports of … Russia. 147.3. 196.0. 241.8. 258.6. 320.6. 217.5. 302.2. 375.0. 411.9. 394.0 …… Other business services. 104.1. 120.5.
CONSIDER THE FACT THAT GERMANY AND FRANCE DOMINATE THE EU MARKET AND ASK YOURSELF IF THEY AREN’T UN-ALIGNING THEMSELVES WITH THE USA OR DOESN’T THE USA MAKE ANYTHING THEY WANT TO BUY? (LOL) DOESN’T LOOK LIKE THE EUROZONE WANTS TO ACCUMULATE ANYMORE “EURODOLLARS” EITHER. I ASK YOU IS THAT HOW ALLIES TREAT ALLY?
EU TRADE WITH THE VARIOUS CONTINENTS COMPARING 2004 STATS WITH 2014
NORTH AMERICA
IMPORTS ROSE 33%
EXPORTS ROSE 33%
WITH EUROPE EXCLUDING THE EURO ZONE
IMPORTS 80%
EXPORTS 92%
ASIA
IMPORTS 67%
EXPORTS 103%
CENTRAL AMERICA AND CARRIBEAN
IMPORTS 61%
EXPORTS 52%
AFRICA
IMPORTS 77%
EXPORTS 101%
SOUTH AMERICA
IMPORTS 52%
EXPORTS 157%