Thursday, December 03, 2009

Service Sector ISM Back In Contraction; Stimulus Fades Already

Inquiring minds are reading the November 2009 Non-Manufacturing ISM Report http://www.ism.ws/ISMReport/NonMfgROB.c ... mber=12943

Economic activity in the non-manufacturing sector contracted in November after two consecutive months of expansion, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

What Respondents Are Saying ...

* "Capital markets remain very tight; lenders are not releasing funds for development projects, limiting expansion." (Accommodation & Food Services)
* "Fourth quarter still looking grim, but potential upturn for Q1 2010." (Professional, Scientific & Technical Services)
* "No one trusts that the recovery is real. Seems everything and everyone is in a holding pattern." (Public Administration)
* "Business is still flat." (Wholesale Trade)
* "U.S. business remains better than 2007 levels, although it's been through personnel and cost reductions that we are now profitable. Business continues to be about 8 percent below 2008 levels." (Real Estate, Rental & Leasing)



Non-Manufacturing ISM History



Is This A Recovery?

Take good look at the chart immediately above. After sloshing around $trillions in bailouts and stimulus packages the NMI could barely get above break-even and topped in September.

New orders are up, but much of that is front-loaded government stimulus efforts. With government spending and reflation efforts by central bankers worldwide, it should not be surprising to see prices rising. Yet, employment is not confirming the pickup in business activity.

Double Dip Recession Warning

Paul Krugman is waking up to a possibility that I think is nearly a given. Please consider Double Dip Warning. http://krugman.blogs.nytimes.com/2009/1 ... p-warning/

I’ve never been fully committed to the notion that we’re going to have a “double dipâ€