ISM Services Jumps Most In History Despite "Business Optimism At Lowest Level Since Financial Crisis"

Despite the weakest employment since 2013, Markit's Services PMI bounced modestly in September to 52.3, but "business optimism about the year ahead is at one of the lowest levels seen since the global financial crisis."

Following August's crash to the lowest since Feb 2010 (51.4), ISM Services has exploded to 57.1 - its highest since Oct 2015 - in an epic farce - the biggest jump on record. However, as Market concludes, "even with the latest increase the surveys are indicating that the economy is growing at an annualized rate of only 1%."

This is the biggest MoM jump in ISM Services in history...

The last 2 times ISM Services jumped this much, the economy crashed into recession...

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ISM Breakdown...

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ISM Respondents:

"Somewhat flat month of overall pricing conditions; however, labor cost and availability remains a concern." (Accommodation & Food Services)

"Business is showing a moderate unexpected uptick over last month. YTD business volume is moderately under forecast." (Management of Companies & Support Services)

"Macroeconomic issues like Brexit and reduced travel from South America impact summer travel." (Arts, Entertainment & Recreation)

"Sales ahead of plan. Net income below plan. Costs running higher than plan. In addition, continued low interest rates impact investment results." (Finance & Insurance)

"Affordable Care Act, changes in Medicare and Medicaid causing problems across much of the healthcare and insurance industries. Acquisition helping our company, but also lost a large client that will impact our financials for the next year." (Health Care & Social Assistance)

"Solid steady growth." (Professional, Scientific & Technical Services)

"Business is [at] an annual high." (Public Administration)

"Sales continue [at an] increased pace from last month." (Retail Trade)

"We are watching the effects of the Hanjin Shipping issues with regard to cost and availability of Asian imports." (Wholesale Trade)

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

Charts: Bloomberg