Tags: Service | sector | ism | Problems

Carr: Service-Company Data Show Deep Problems Under the Surface

By    |   Tuesday, 05 Jun 2012 11:31 AM

While the overall headlines about the ISM non-manufacturing survey are bullish, two trouble spots are hidden deeper in the report. Employment was weaker in May and exports are down.

The employment index fell nearly 7 percent in the month while the export index slid nearly 9 percent.

Services account for about 70 percent of the U.S. economy, according to many economists. Weakness in hiring could be another sign that a recession is likely in the near future. The weakness in exports confirms that global demand is slowing.

ISM indexes report the results of surveys conducted among purchasing managers in various industries. The report provides timely and unedited insights into the state of the economy. In addition to the numbers, survey participants also include comments about what they’re seeing.

A comment from a participant in the accommodation and food services industry shows that hope may be ahead of reality.

"While we tend to remain optimistic about the economy, our numbers do not show a surge in activity,"  the representative said. "It appears consumers are maintaining their 'let's wait and see' attitude."

A professional, scientific and technical services purchasing manager focused on cost cutting, noting that the "business outlook is flat for the remainder of 2012 with emphasis on cost containment, restructuring and cost-savings projects."

These comments from the frontlines of the economy confirm the opinions of Jonathan Basile, an economist at Credit Suisse in New York.

“The U.S. economy is really not making the grade," Basile told Bloomberg. "The softer tone is going to continue. We’ll see a slower profile for growth in the services sector.”

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2012-31-05
Tuesday, 05 Jun 2012 11:31 AM
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