ISM Composite Index Ticks Up

Today the Institute of Supply Management released their monthly Non-Manufacturing index.  Today's release was a complete reversal of last week's increase in the manufacturing index as the index pointed to a drop from 52.9 in October to 52 in November.  While the number does still indicate expansion in the "services" side of the regional survey the trend has been slowing for the last several months. 

One thing to note here is that also released today was the New Factory Orders report which showed a sharp contraction from September's positive 0.3% print to a negative 0.4% reading for October.    Importantly, both orders for durables goods, down 0.5%, and orders for non-durable goods, down 0.3% percent, showed weakness in the overall sector which may portend to much weaker data coming in the months ahead.  

Back to the Non-Manufacturing Index we also saw a slowing in the buildup of unfilled orders which slowed to 0.2% versus 0.6% and 0.9% gains in the prior two months.   As opposed to the media's hype about the strength of the consumer the slowing of unfilled orders combined with the decline in new orders will hold down future shipments.  Another possible alarm in today's report is a big build in inventories of 0.9%.  High inventories, together with soft orders, will limit demand for inventory replenishment.

Furthermore, there was a large drop in the employment index which fell 4.4 points to a sub-50 level of 48.9 to indicate a decline in the ...