Thursday, February 3, 2011

ISM Services

ISM Services was far above consensus forecasts.  There are a few red flags raised in the report though as noted below.

Inventories contracted this month.  This would be inline with inventory contraction in the Q4 GDP advance report.  The question is are vendors reigning inventory out of fear of lack of future demand or simply to bring inventory levels more inline with current sales.

Prices are rising everywhere except at the Fed.

New Export Orders:
Although still expanding the rate of growth has slowed.

They have expanded at a higher rate of growth which combined with slower growth in new export orders is not a good combination for future reports.


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