ISM services surprises to upside

Notwithstanding all the market turmoil in August, the ISM services index actually rose to 53.3 from 52.7 in July. The components were very mixed however. Business Activity fell .5 pt to 55.6 and puts in back in line with the 6 month avg. New Orders rose 1.1 pt to 52.8 off the lowest level since Aug ’09 in July. Backlog orders rose 3.5 pts but still remain below 50 at 47.5. Export Orders jumped 7.5 pts to 56.5 and puts it back in line with the levels seen in May and June. Employment fell almost 1 pt to 51.6, the lowest since Sept ’10. Prices Paid rose almost 8 pts to a 3 month high. Of the 18 industries surveyed, 10 saw growth, 5 contraction and the balance saw little change. The ISM did state the obvious in conclusion, “there is a degree of uncertainty concerning business conditions for the balance of the year.” Bottom line, the services sector held up much better than feared as maybe some businesses are taking a more wait and see view of global events rather than immediately altering decision making. The ISM last Thursday remaining above 50 also told a similar story. With this said a further unraveling in Europe and continued lack of traction in US economic activity and business decisions will change quickly.

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