So the economy is slowing...no, it's growing! Ah, we have no idea

As the We received word of more concerns in the real economy.

The seasonally adjusted final IHS Markit US Services Business Activity Index registered 50.6 in October, dropping slightly from 50.9 in September and downwardly revised from the flash figure of 51.0. The rate of increase in business activity was only marginal overall and the slowest since the current expansion began in February 2016. Growth was weighed on by lacklustre client demand and greater hesitancy among customers to place orders.

Concurrently, the New Business Index posted below the 50.0 neutral mark for the first time since data collection began a decade ago, signalling a marginal drop new order levels. Companies stated that the postponement of orders placed by clients and weaker demand underpinned the broad stagnation.

Meanwhile, new export orders fell for the third month running. The rate of contraction eased slightly from September's recent record, but was still the second-fastest fall in the series' history (exports data have been collected as a stand-alone series since September 2014).

Subsequently, service providers registered a faster decline in Marginal upturn in output Fastest fall in employment for almost a decade Renewed rise in input prices Including IHS Markit U.S. Composite PMI™ employment in October as voluntary leavers were not replaced and firms struggled to fill outstanding vacancies. The rate of contraction was solid overall and the sharpest for almost a decade.

Which would be a bad sign that indicates the economic slowdown isn’t just in the manufacturing sector. But then within the hour, another organization released a survey on the same subject that said something very different.

The Institute for Supply Management’s said its non-manufacturing index rose to 54.7% last month from a 52.6% reading in September that was the weakest in three years.

Economists polled by Marketwatch had expected the index to rise to 53.8%. Numbers over 50% indicates businesses are growing….

What happened: New orders and employment levels both improved. The index for new orders climbed 1.9 points to 53.7%.

Even better, the employment gauge rose 3.3 points to 53.7% from a five-year low in September. Some executives complained of shortages of skilled labor with the unemployment rate at a 50-year bottom.

If you dig into the ISM Services survey, pretty much every statistic was going in the right direction. It was a marked contrast to the ISM manufacturing index for October, which showed most of the same indicators in decline.



Nothing makes a lot of sense these days in figuring out where the economy is at, but at the same time, the stock market keeps reaching new highs on “trade optimism”. However, I'm curious to know what “trade optimism” would do for us anyway, even if an agreement was worked out? We saw that again today, as the report on US trade for September showed that part of the economy to be acting in a recessionary way.

September exports were $206.0 billion, $1.8 billion less than August exports. September imports were $258.4 billion, $4.4 billion less than August imports.

The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.7 billion to $71.7 billion and a decrease in the services surplus of $0.1 billion to $19.3 billion.

Year-to-date, the goods and services deficit increased $24.8 billion, or 5.4 percent, from the same period in 2018. Exports decreased $7.0 billion or 0.4 percent. Imports increased $17.8 billion or 0.8 percent.

It’s way early to know for sure where Q4 2019 will end up, but the Federal Reserve Bank of Atlanta sure isn’t counting on much, as their first estimates have Q4 growth at a miniscule 1.0%. I also want to know what happens if the hopefulness that has led to our recent stock market Bubble collides with that reality of no growth in the real economy?

I don’t trust what I'm seeing in the markets vs reality. It doesn’t feel rational right now.