Manufacturing Recession Spills Over Into Services After Dismal PMI, ISM Data

manufacturing growthTyler Durden:  In the words of Markit’s chief economist, “the US upturn has lost substantial momentum over the past two months,” as the golden child of any current bullish narrative – the Services economy – drops to its weakest since October 2013 (PMI 53.2, missing expectations).

Plunging backlogs suggest hiring will slow notably and then ISM Services hit at a 23-month low, plunging back towards manufacturing’s weakness, with employment at its weakest since April 2014 and unadjusted new orders at their weakest since Jan 2014.

Services PMI plunges back towards Manufacturing.

 

 

Markit commentary is dismal…

Slower service sector activity, combined with subdued manufacturing growth, means January’s expansion was the weakest seen since October 2012 with the sole exception of October 2013, when business was affected by the government shutdown.

…backlogs of uncompleted work have been falling in recent months, which usually means that such strong hiring is unlikely to persist…

While the first quarter may see a rebound in GDP due to technical factors such as an inventory adjustment and weather-related variations, the survey data paint a darker underlying picture of business conditions.

And then ISM Services hit…

 

With new orders and employment plunging…

 

Respondents are not exuberant:

We have experienced a slight increase in business activity since the start of the new year. Our new job orders have increased about 10 percent and the job awards about 12 percent.” (Professional, Scientific & Technical Services)

“Healthcare requirements in several states changing, which will [affect] our business directly.” (Health Care & Social Assistance)

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