The non-manufacturing PMI was 61.6 which surpassed the consensus of 58. Out of 65 economists making predictions, the highest estimate was 59.6.
This was a 5 standard deviation beat. It was much better than the prior PMI which was 58.5. As you can see below, this was the 2nd best reading in the history of this report.
This report was started in 1997. Business activity index increased 4.5 points to 65.2. New orders index was up 1.2 to 61.6. Employment was up 5.7 points to 62.4. Imports were up 3 points to 55. Prices were up 1.4 to 64.2.
This report was perfect. The only problem is if it’s accurate. It’s too good to be true based on the hard data and even surveys like Markit.
This report corresponds to an impossible to imagine 4.6% GDP growth rate. I know that Q2 growth was 4.3% which is close to that, but none of the estimates for Q3 are that high.
It’s also important to point out that one big reason why some estimates are expecting about 4% growth is that they include these ISM surveys in their prediction.
You can’t use a prediction which includes the ISM PMI as justification for why these reports are accurate. I think the Markit estimate of about 3% GDP growth is more realistic.
ISM PMI – ADP Report Beats Estimates
The September ADP report beat job growth estimates. It’s in tune with the retail wage increases as it shows the labor market is quickly tightening.
As you can see from the chart below, it rebounded from the weakness seen in August. The ADP report hasn’t been correlated with the monthly BLS report especially recently. Therefore, I’m careful to proclaim the BLS report will also beat expectations.
Since we don’t have the official BLS number yet, it’s fair to celebrate this positive report until Friday morning.
The August ADP report was revised to show 168,000 jobs created instead of 163,000 jobs. But it still was a disappointment and below the BLS reading.
