Sept ISM services at 53 was about in line with expectations of 52.8 and down a touch from Aug. The 4 month average is 53.1 so it’s interesting that the Aug/Sept timeframe didn’t see any pronounced weakness in light of what went on globally. Business Activity rose 1.5 pts to the best since March. New Orders were up almost 4 pts to a 4 month high and Backlogs went back above 50, up 5 pts. The one negative though was the Employment component which fell almost 3 pts to 48.7, the weakest since April ’10. Export Orders did weaken by 4.5 pts but stayed above 50 at 52.0. Of the 18 industries surveyed, only half reported growth. While hanging in above 50, the ISM said “Respondents’ comments reflect an uncertainty about future business conditions and the direction of the economy.” Haven’t we heard that before. Bottom line, the recent data seen in the Aug/Sept time frame, capturing the change that occurred in the global economy/markets, has hung in better than feared with the natural tendency on the part of both businesses and consumers to take a step back to see how things play out. While the US economy still remains challenging, the view was of Europe and China in the last two months and a wait and see attitude seems to be the result rather than a big change in behavior.
