The Markit U.S. Services PMI™ final data shows a weaker rise in service sector business activity in May.
The Composite PMI (manufacturing plus services) flirts with contraction.
Key Points
- Service providers indicated slower activity and new business growth
- Weakest rise in payroll numbers since January 2015
- Business optimism eases to a post-crisis low in May
Relatively subdued client spending provided firms with the opportunity to clear backlogs of work in May. Lower volumes of work outstanding have now been recorded for ten months running, which is the longest continuous period since the survey began.
Reduced pressure on operating capacity and weaker new business growth acted as a brake on job hiring in May. Weaker employment growth has now been recorded in three of the past four months, with the latest expansion in payroll numbers the slowest since January 2015.
Services PMI
Composite PMI vs. GDP
Comments from Markit Chief Economist Chris Williamson
- “The service sector reported one of the weakest expansions seen since the recession in May, adding to signs that any rebound of the economy in the second quarter may be disappointingly muted.”
- “With optimism about the business outlook dropping to a new post-crisis low, companies are expecting conditions to remain challenging in coming months, citing uncertainty about the presidential election as well as broader worries about weak demand at home and abroad.”
- “Add these disappointing service sector numbers to the downturn now being seen in manufacturing, and the PMI surveys point to GDP growing at an annualised rate of just 0.7-8% in the second quarter, notwithstanding any marked change in June.”
- “The slowdown and further drop in optimism continued to cause companies to pull-back on recruitment, with the survey signalling just under 130,000 extra jobs being created in May, driven entirely by the service sector.”
Point number 3 provides another GDP estimate. This one at 0.7% to 0.8%.
Mike “Mish” Shedlock
“Point number 3 provides another GDP estimate. This one at 0.7% to 0.8%.”
Bullz need to explain the driver(s) that will lead to “escape velocity”.
Current growth tepid at best (with revisions could easily be contraction) … what is on the horizon? … other than double digit premium increases for 2017 health care? …. folks are going to increase spending with that on tap?
Inventories / Sales – emphatically – says business cycle OVER.
Recession at door’s threshold … or already in Da House.
Taking interest rate hike off the table makes for a bad day for King Dollar.
Yen having a BIG day < 107 to $US … up 2%.
Well, Japan is now collapsing after more than three decades of GROSSLY IRRESPONSIBLE AND RECKLESSNESS fiscal and monetary mismanagement.
What Japan is going to get is a TOTAL CURRENCY COLLAPSE of the Yen.
Other than China, Japan is the biggest debt wreckage in the history of the world. Japan’s government debt is nearing 250% of Japan’s GDP and the nominal amount of that debt is over $14 trillion compared to the $10+ trillion of the US despite the fact that Japan is a small country with an economy only one-third the size of that of the US.
300 Yen to Dollar Among Japan Debt Scenarios for Author Noguchi
Yukio Noguchi, a former Ministry of Finance official whose business books are best sellers, envisages a scenario in which a failure of Japan’s economic stimulus could drive the yen to weaken beyond 300 per dollar.
“If these fiscal and monetary policies continue, the yen’s value is at great risk,” the 75-year-old professor at Tokyo’s Waseda University said in an interview on May 11. “If you base your thinking on the efficient-markets hypothesis, you can’t predict a level for the currency. But, if the nation’s economic strength weakens, it is possible the yen could drop to 300, or 500, or 1,000 to the dollar.”
http://www.bloomberg.com/news/articles/2016-05-26/300-yen-to-dollar-among-japan-debt-scenarios-for-author-noguchi
Mish- Off Topic, but I am sure people are wondering. The Bitcoin Halving is coming up in July and there has been a huge spike in the BTC price. People need to be informed about what is going on. #HalvingHype
In a nutshell, wild manic speculation and nothing else.
“GDP” is a contrived and infinitely manipulatable Keynesian measurement of something irrational and ephemeral that simply CAN’T be measured…
Central planners are in love with statistics, measurements, number-crunching, empiricism, quotations, authorities, citations, footnotes, charts, graphs, credentials, theories and models.
They HATE and ridicule simple observation and the drawing of logical conclusions based on that.
It’s high time we all stopped parsing these ridiculous government numbers. altogether. “Analysts” and “economists” all need to get out a bit more…
^^^^ This.
Lies, damned lies,,,,and statistics. Central banks own it all now.
+googol
The Founders not including running a daycare facility for gullible and useless empiricists and statistics hacks, as part of the Federal Government’s enumerated powers, was not simply an oversight.