Wednesday, September 30, 2009

Stat of the Day: Conflicting Data Points

As the market as seen the last couple of days, the economic reports have been very conflicting to the market. Typically improvements from last month or quarter, but below expectations. Thats typically short term bad for the market, but sometimes they provide the best buying opportunities. Below we'll review the major data points this mornings and as you'll see the numbers aren't as bad as the market reacted with the 1%+ sell off:


Chicago PMI

This number that mostly measures the manufacturing activity in the Chicago region came in much weaker then expected and actually weaker period. It's a confounding number because no indication exists that September was a weak month. Think Mr Ghriskey summed is up pretty well.

  • The Institute for Supply Management-Chicago business barometer fell to 46.1 in September from 50.0 in August.
  • Economists had forecast the index at 52.0. A reading above 50 indicates expansion in the regional economy.
  • "Don't know why it looks so weak, when at least anecdotally we've been hearing that September was a good month economically, and a pickup from August," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.


NAPM New York
Then this report from the New York area came in much better then expected and actually topped the highest level in nearly 3 years. So this report completely conflicts with the Chicago PMI.

  • New York City business activity surged in September to the highest level since November 2006, according to the survey taken by the Institute for Supply Management-New York (ISM-NY, formerly NAPM-NY). The Current Business Conditions index rose to 72.9 in September from a revised 55.7 in August. These were the first back-to back months above the breakeven 50 mark since the US recession began in December 2007.

ADP Jobs
Now this report on private sector jobs use to not ever be followed until the last year or so. It sums up alot of what we've seen lately. The reported numbers were the best since July 2008 meaning the job market has recovered to levels not seen since pre-Lehman (by the way the stock markets hasn't yet). Yet the numbers weren't as good as hoped for so it was disappointing to the stock market. The August numbers were revised down 21K so its possible that the Sept numbers will be revised down as well closer to the estimates. Still what should sink in is that the trend is still positive. The numbers are improving and even ADP finishes with the caveat that job losses are only expected to last a few more months.

  • Nonfarm private employment decreased 254,000 from August to September 2009 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from July to August was revised by 21,000, from a decline of 298,000 to a decline of 277,000.
  • September’s employment decline was the smallest since July of 2008 and employment losses have diminished significantly over the last two quarters. Nevertheless, employment, which usually trails overall economic activity, is likely to decline for at least several more months, with losses continuing to diminish.

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