By webmaster on
February 5th, 2008
- Today’s drop in ISM non-manufacturing to 41.9 (vs 53 expected) was a clear shock to equity markets. The weakness reported was across almost all sectors: only three reported an improvement in conditions: utilities, scientific services & education. The last time we’ve seen such a big drop in non-manufacturing ISM was directly following the 9/11 attacks, after which the index bounced sharply.
- It’s pretty strange to see conditions deteriorating this rapidly, especially since consumer confidence stabilised last month and ISM manufacturing actually rose. The manufacturing index is by the way a more reliable indicator of GDP and is still signalling a 2% or more growth rate.
- perhaps the credit crunch can be used as an excuse for today’s weak survey, but interestingly only 14.6% of respondents in the survey said that the financial markets turmoil was having an effect on their financing. So the rest didn’t.
- All in all today’s ISM non-manufacturing report looks like a outlier event and we therfore wouldn’t give it too much weight at this time.
Categories: Thoughts from the Floor
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