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Wednesday, August 5, 2009

Economic Activity in the Non-Manufacturing Sector Contracted in July and Jobs are Down AGAIN

*My belief is that today's report will allow for a pullback but since the banks are being held up AGAIN(BAC 16.25 WFC 27.0), the pullback will be short lived and they will run this market up to 10,000 or at least try for the 3Q. After that it's all over because all the stimulus in the world cannot erase one very salient fact: Consumers have either lost their job, are going to lose their job (CAT letting go another 500 so they can say they have forward looking goody goody numbers) or the job they have or will get is at a lesser wage. So higher oil prices and higher home prices are NOT sustainable for the future. The only ones making oodles of money are the same ones who gave you this mess in the first place: The BANKERS!

"The NMI (Non-Manufacturing Index) registered 46.4 percent in July, 0.6 percentage point lower than the 47 percent registered in June, indicating contraction in the non-manufacturing sector for the 10th consecutive month, at a slightly faster rate. The Non-Manufacturing Business Activity Index decreased 3.7 percentage points to 46.1 percent. The New Orders Index decreased 0.5 percentage point to 48.1 percent, and the Employment Index decreased 1.9 percentage points to 41.5 percent. The Prices Index decreased 12.4 percentage points to 41.3 percent in July, indicating a significant decrease in prices paid from June. According to the NMI, seven non-manufacturing industries reported growth in July. The majority of respondents' comments reflect a sense of uncertainty and cautiousness about business conditions."
Go here for full report.

The 10 industries reporting contraction in July — listed in order — are: Other Services; Management of Companies & Support Services; Public Administration; Finance & Insurance; Wholesale Trade; Professional, Scientific & Technical Services; Transportation & Warehousing; Construction; Educational Services; and Accommodation & Food Services.

"Economic activity continues to decline." (Transportation & Warehousing)
"Continued soft sales, offset by improving profit margins." (Accommodation & Food Services)
"Stimulus funds have increased business activity." (Public Administration)
"Business downturn seems to be stabilizing somewhat." (Information)
"There is still downward pressure on our products; however, our sales volume is stabilizing." (Mining)
"The past month's volume target and operating volumes were met. Rising concerns over the future form of healthcare reform and impact on provider organizations." (Health Care & Social Assistance)
"Although attendance is up, business levels remain steady. More people, fewer dollars spent — an indication that discretionary spending is limited." (Arts, Entertainment & Recreation)

ADP Job Numbers
from MarketWatch via econompicdata
In another sign that the labor market remains weak even as the economic downturn is moderating, private-sector employment in the United States fell by an estimated 371,000 jobs in the July ADP employment index, the smallest decline since October. The goods-producing sector lost 169,000 jobs, while the service sector lost 202,000, according to ADP.

"Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months," ADP said in a statement.

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