Karim writes:

Similar to manufacturing, service sector ISM stabilizing at high levels; Large increase in backlogs also bodes well for future activity.

With employment index now also crossing the 50 level, adds to upside potential in NFP tomorrow; look for headline NFP up ~600k; with ex-census up ~225k.



May April
PMI 55.4 55.4
Activity 61.1 60.3
Prices Paid 60.6 64.7
New Orders 57.1 58.2
Backlogs 56.0 49.5
Employment 50.4 49.5
Export Orders 53.5 57.0
Imports 56.5 56.5

Anecdotes below seem to bode well for corporate profits: demand improving and costs controlled.

  • “Our business continues to grow. We are significantly above last year’s pace.” (Information)
  • “Business is steady right now — not the normal spring for construction, but improving.” (Construction)
  • “Outlook is still generally flat for the remainder of this year, with signs that orders and activity will be picking up.” (Professional, Scientific & Technical Services)
  • “Continuing our pattern of cautious optimism. Consumers appear to be coming out of hibernation and willing to spend. We expect that if this trend can remain solid, we’ll in turn spend additional dollars to support and drive sales activities.” (Retail Trade)
  • “Customers’ activity is improving in some parts of the country.” (Wholesale Trade)
  • “We continue to ‘staff to volume’ in order to control labor and supply costs.”(Health Care & Social Assistance)

Yes, looking like we’re modestly improving domestically with the risks mainly external including spillover weakness form China and the euro zone.

Export growth down a touch but not serious to this point.

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