Service ISM Released 1 Hour Early Because, Falls to Lowest in 7 Years

February 5, 2008

Service sector ISM caught the market completely by surprise, not only because it was released 1 hour early but also because it fell to the lowest level in 7 years.

This is the first time the service sector contracted in at least 5 years and confirms that the US economy is in a contraction. Surprisingly, the manufacturing service is actually now doing better than the service sector.

The largest contractions came in the new orders, employment, imports and business activity. This data validates the Fed’s decision to cut interest rates by 50bp last week and will lead to a new round of selling in the US dollar. Although there are still 6 weeks until the next Federal Reserve interest rate decision, at this point we are looking at the realistic possibility of a back to back 50bp rate cut and 2.00 percent rates before this easing cycle is over. Stock futures are down sharply pointing to a very weak open.

Why did the Institute for Supply Management release their report early?

According to their website, “The January 2008 Non-Manufacturing ISM Report On Business® is being released early today due to a possible breach of information. This early release time is for today’s Report only.”

Read the Full ISM Report