July 6, 2010

ISM Non Manufacturing Index Slips a Bit, But Still in Expansion

The Institute for Supply Management’s Non Manufacturing Index came in at 53.8% in June, down from 55.4% in May.

Here’s how AP’s Tali Arbel led the 12.17 p.m. wire service report:

The service sector grew more slowly in June, an industry trade group said Tuesday, offering the latest sign that the economic recovery is weakening as the second half of the year begins.

This may be the kiss of death, but Arbel’s coverage of the ISM report is exceptionally well-done, thorough and even quite educational for those who are unfamiliar with the significance of ISM’s data.

Here are some excerpts:

A reading above 50 indicates expansion. June’s reading is well above the 37.2 low in November 2008. But it’s far below the pre-recession high of 67.7 in 2004.

The index was broadened in January 2008 to consider four areas of information: business activity, employment, supplier deliveries and new orders. Before that, it only looked at business activity.

A robust service sector, which accounts for about 80 percent of U.S. employment, is crucial to keeping the economy expanding and adding jobs. Service-oriented jobs include those in hospitals, shops, restaurants, airlines, schools, construction, banks and consulting firms, among others.

The dip in the non-manufacturing index follows last week’s raft of economic data that points to a slowing recovery.

… One troubling sign from the service-sector report is a decline in new orders, which signal future business. While still growing, they fell in June to their lowest level since December.

… ISM also says hiring plans dipped in June after growing in May for the first time in 28 months.

… Of the 18 industries surveyed, 15 said they were growing. They were led by real estate and arts and entertainment. The finance and insurance sector and “other services,” a collection of smaller industries, said they were shrinking; educational services grew at the same pace in June.

Overall, the conditions reported are of a not as good as it has been situation with trouble signs in key metrics. Again, nicely done.

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Background: My BizzyBlog archive search indicates that Arbel was a co-author with Martin Crutsinger of a mid-June report on an unemployment claims release from the government that held out the possibility that private sector jobs might be lost. Sure, the number from BLS came in at +83,000, but ADP’s employment report two days earlier showed only 13,000 jobs added, and I suspect we’re going to see downward revisions coming out of the government in the next two months.

Going back further, he was a minor contributor to the AP’s June 2009 coverage of a Pew Research study that made demonstrably and obviously false claims about the robustness of “clean job” growth compared to job growth in the rest of the economy.

‘Obama: The Great Jobs Killer’

Filed under: Economy,Taxes & Government — Tom @ 9:13 am

The opening rhetoric in Wayne Allen Root’s column at the Las Vegas Review-Journal is straight out of stand-up comedy, but its meaty middle excerpted below tells you what conditions on the ground are really like (bolds are mine):

You won’t find proof of the damage Obama is doing on Wall Street, but rather on Main Street. My friends are all part of the economic engine of America: Small business. Small business creates 75 percent of new jobs (and a majority of all jobs). I called one friend who was a wealthy restaurant owner. He says business is off by 60 percent. He’s drowning in debt. He won’t last much longer. His wealth is gone.

I called another friend in the business of home improvement. He says business is off 90 percent from two years ago. My contractor just filed personal bankruptcy. She won’t be building any more homes. The hair salon where I’ve had my hair cut for years closed earlier this year. Bankrupt. But here’s the clincher — ESPN Zone just closed all their restaurants across the country. If they can’t make it selling cheap food and overpriced beer with 100 big screens blaring every sporting event on the planet to a sports-crazed society, we are all in deep, deep trouble.

I’ve polled all my friends who own small businesses — many of them in the Internet and high-tech fields. They all agree that in this new Obama world of high business taxes, income taxes, payroll taxes, capital gains taxes, and workers compensation taxes, the key to success is to avoid employees. The only way to survive as a business owner today is by keeping the payroll very low and by hiring only independent contractors or part-time employees provided by temp agencies.

The days of jobs in the private sector with big salaries, full benefits, and pensions are over.

… Unfortunately, small businesses don’t have the power to impose taxes or print money. So unlike government, we’ll just have to cut employees and run lean and mean.

… The trillion-dollar corporate handouts (neatly named “stimulus”) may have kept big business in the money for the past 18 months, and artificially propped up the stock market, but small business is the real canary in the coal mine.

My small business-owning friends aren’t creating one job. Not one. They are shedding jobs. They are learning to do more with fewer employees. They are creating high-tech businesses that don’t need employees. And many business owners are making plans to leave the country. In a high-tech world where businesses can be run from anywhere, Obama has a problem. … (He) is chasing away the business owners he desperately needs to pay his bills.

The ESPN Zone story is more disturbing than you might think. This was an enterprise that went over a decade and presumably had many prosperous years before Disney pulled the plug, doing what Root’s friend the restaurant owner didn’t do when he probably should have.

Consider this anecdotal commentary from HillBuzz about an area in Chicago just north of where the Windy’s City’s closed ESPN Zone restaurant was:

“the economy is in rebound” .. is what this “Recovery Summer” the White House keeps Potemkin-messaging to us is supposedly all about. The truth, however, is that American businesses are terrified of what Democrats are doing to this country, and uncertain of whether or not they can remain in business … Couple that with the uncertainty the insane Obamacare legislation (which no Democrat, to this day, has probably read) brings, and it’s a toxic climate for entrepreneurship unlike anything we’ve ever seen.

Small business owners we know are directly telling us this.

Here in Boystown, there was no new hiring for the summer in the bars and restaurants we know well…everyone is just making do with who they have on team already, because they do not want to be stuck with massive healthcare costs for their staff in the future. They also know that customers who are being impacted by Obama’s wealth distribution are all cutting back on their indulgences and extras in life, and that means no meals out or nights at the bar.

Everyone’s lives are amazingly connected here in Chicago. The real estate agents who’ve lost their businesses in the Obama economy can no longer afford to go to the hair dressers as often. That means the hair dressers make less money, and can now no longer afford their lifestyles, or their apartments. That leads to vacancies in buildings that are usually always rented, which means landlords make less money now, but have to pay enormous mortgage payments anyway, and this means those property owners no longer have the discretionary funds to pump into the community via those restaurant and bar visits. And the glut of apartments for rent is incentive for people to wait the economy out and not buy, or else they can’t buy because money isn’t being lended, which cycles back to the real estate agents who can’t get their businesses back on their feet because people don’t have the cash to buy homes anymore. And that, of course, takes us back to people like the hairdressers who no longer have any money because in the Obama economy people are cutting back on the entire service industry in general.

This downward spiral is still occurring in so many areas of the country. A genuine recovery would have put the brakes on most of them. But we’re not in a genuine recovery.

Positivity: Rio de Janeiro’s Christ the Redeemer image restored

Filed under: Positivity — Tom @ 8:37 am

From Rio de Janiero:

Jul 6, 2010 / 12:23 am (CNA).- The world-famous statue of Christ the Redeemer in Rio de Janiero, Brazil has been re-inaugurated after four months of restoration work.

The large statue of Christ with his arms outstretched above Brazil’s second largest city is recognized as one of the seven wonders of the modern world. It is currently illuminated with green and yellow lights to support the Brazilian World Cup soccer team.

The statue, which is one of the most recognized Catholic symbols worldwide, will be 80 years old next year.

The repairs fixed a series of leaks that were affecting the chapel located inside the base of the statue. Technicians reported removing 80 gallons (300 liters) of water from the inside of each of the statue’s arms. The structure was also rebuilt to protect it from lightening strikes. …

Go here for the rest of the story.