Article written by Tyler Durden, Zero Hedge
Today marked the release of services industry activity in the US, tracked by the ISM (Institute for Supply Management).
Here where highlights:
- Business activity rose to 63.0 vs 62.4 prior month
- New orders rose to 61.5 vs 56.8
- Employment rose to 51.8 vs 47.9; the highest since February
- Supplier deliveries fell to 54.9 vs 60.5; the lowest level since February
- Inventory change rose to 48.8 vs 45.8
- Prices paid fell to 59.0 vs 64.2
- Backlog of orders fell to 50.1 vs 56.6
- New export orders fell to 52.6 vs 55.8
- Imports fell to 46.6 vs 50.8
- Inventory sentiment rose to 55.4 vs 52.5
ISM respondents were mainly optimistic, saying:
Business has been fairly stable over the summer; however, there is still a great deal of uncertainty as we move into fall and winter [and] how our sales volume will be.” (Agriculture, Forestry, Fishing & Hunting)
“Our industry is facing a bleak outlook, as the Hollywood studios have pulled back almost all of their content from October and November and moved it into next year. Coupled with the state health mandates restricting our attendance, we expect to operate at a loss in 2020 and 2021.” (Arts, Entertainment & Recreation)
“Work orders are improving rapidly. Lack of available labor is having a significant impact on our ability to fulfill orders.” (Construction)
“Insurance industry will experience some impact from weather- and protest-related property damage and business interruption.” (Finance & Insurance).
Chris Williamson, Chief Business Economist at IHS Markit, spoke on survey results:
“The U.S. economy continued to rebound in September from the deep contraction seen at the height of the Covid-19 pandemic, with business activity rising across both manufacturing and services to round off the strongest quarter since early-2019”.
“COVID-19 worries and social distancing continued to impact many businesses, however, especially in consumer-facing sectors, where demand for services fell once again. However, business and financial services, healthcare and housing sectors all fared well as the economy continued to revive, and exports of services also picked up as other countries continued to open up their economies”.
“Encouragingly, new orders for services grew at an increased rate in September, putting additional pressure on operating capacity and fueling another robust rise in employment. A further rise in backlogs of work bodes well for robust jobs growth to be sustained into October”.
However, prospects for the coming year were much more bleak.
Growing concerns about rising virus cases as a result of a second wave of infections and the presidential election make the economy more susceptible to a weakening episode. Especially without any more support.
Works Cited:
https://www.zerohedge.com/economics/us-services-industry-slowed-and-accelerated-september-you-decide