ISM Service Economy Holding Positive, Barely

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The economic data has been coming out poorly all week.  But the last report for the week came in line to slightly higher than expectations and is showing that maybe not everything went to hell in a hand basket.  The ISN non-Manufacturing for September came in at 50.2 versus the August reading of 50.6.  Estimates from Dow Jones showed 50.0 as the consensus.  Below are some of the key individual components of ISM we track:

INDEX                           SEP   AUG  Change
Business
activity/production       52.1   51.6   +0.5
Employment               44.2   45.4   -1.2   
New Orders                 50.8   49.7   +1.1
Employment                44.2   45.4   -1.2
Prices                         70.0   72.9   -2.9
Inventories                   45.5   53.5   -8.0
Backlog                        46.5   49.0   -2.5

In construction, business activity stayed steady over the last month.  In retail, conditions werelisted as "still not good, but there are signs of improvement."  Ininformation, "Continue to see a retrenchment in expenses as wecontinually adjust expectations downward."  Transport and warehousingwas noted as "Business is good,"  In public administration, "Publicsector facing continued financial and revenue pressures. Most allcapital expenditures are being deferred.  Orders for routine suppliesare reviewed for savings opportunities."

The good news here is that services are not crashing as we sawin yesterday’s manufacturing numbers.  The employment situation is bad too, but we already knew that from weekly jobless claims and fromunemployment this morning. 

Jon C. Ogg
October 3, 2008