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Cognitive Dissonance: Services Sector Edition
Call off the recession. Maybe.
A key gauge of US services sector activity defied a dour signal from an alternative survey, suggesting the biggest part of the world's largest economy began the third quarter on solid footing.
ISM services printed 56.7 for July, well ahead of consensus and above the highest estimate from five-dozen economists. The range of (educated) guesses was 51-55.9.
The upbeat print stood in stark contrast to S&P Global's gauge, which was revised only marginally highe
Hey Mr. Heisenberg: Best line you have ever uttered (or written): what if, instead, nobody’s right?
We got wildly divergent data. We got wildly divergent talking heads. We got strategists and managers frontrunning like there’s no tomorrow. We got politicians and central bankers just running. It’s like the lottery — aka the dumb tax: someone will ultimately get all the choices right. But that doesn’t make them smarter. Or worth following,. Trade what’s in front of you, and try not the be distracted by the shininess of tv lights, celebrity, hubris, and the like. I can create equally compelling bull and bear arguments. Cognitive dissonance rules! Be careful out there!
If I recall correctly, for the manufacturing indicies, S&P Global (former Markit) surveys small, medium, and large companies, while ISM surveys larger companies. Markit claims other differences also improve their correlation with official data, although that may be self serving. https://ihsmarkit.com/research-analysis/us-regional-business-surveys-the-ism-and-ihs-markit-pmi-200519.html I don’t know if the foregoing holds for their respective non-manufacturing (services) surveys. It would make sense, in the current economy, for smaller companies to be returning less positive responses.
When in doubt, I include self-serving in my viewpoint….
Merely eyeballing the graph, could be the ISM (large company survey) lags the S&P (all company sizes) by 6 months. I don’t have the raw data to do a time series, but given that small companies can be a canary sometimes, intuitively it makes sense.
H, shout out for the work here. Your articles are a welcome break from the hamster wheel.