One of the greatest losses in the new media age is the old-fashioned editor. Flint-tough, cranky and dismissive to reporters unless they had done their digging properly and found “news.”
Today, any story which attracts clicks and eyeballs and wins the high-speed news race, even if half-fabricated or a not-news re-hash — good job!
One aspect of good reporting will take you back to annoying days in school. You’ve labored over a term paper for a couple of weeks, got it done on time, made a good argument in good style, and get a C-plus with this note: “Derivative. Needs original sources.”
It’s not good enough to read and quote several historians’ comments on George Washington’s writing — instead, read and quote George himself.
Today in business news, and especially the daily flood of economic data, every new datum is spun into importance, fluffed to look hot on your phone, and often has lost its original-source heft. Or heft has been manufactured.
One of the best economic sources around
One of the very best sources on the current state of the economy is available in two pieces in the first week of every month. On the first business day each month, the Institute for Supply Management (ISM) reports its manufacturing-sector survey, and then a few days later the service-sector one.
The ISM used to call itself the much more descriptive National Association of Purchasing Management — which is what it still is, for the most part. In those days known as NAPM, or “PMI” (for purchasing managers’) — PMI is still used around the world as the name for offshore clone surveys.
The ISM manufacturing survey began 45 years ago (its very oldest in 1931), and the service-sector companion only since 1998. These surveys are crucial for several reasons:
- They are the most current of all data — there is no “survey lag.” The ISM surveys its members in the last week of each month, and then reports immediately.
- Purchasing managers are often the most forward-looking of all employees in any company. Do we have enough? Too much? What’s the change in sales trend?
- Continuity of surveys is precious. Whizz-bangs just out of B-school are forever fiddling with surveys, which makes new ones not comparable to historical data.
- Although not predictive except by trend change, they may be the best current indicators of economic activity available to markets. The ISMs have caught the beginnings and turns and ends of every interest rate and Fed cycle.
How to read the ISM report
And they are simple. The releases are two-digit numbers with a one-place decimal.
A reading of 50.0 is a break-even economy, 44.0 marks a real recession and over 60.0 shows overheating.
There are dozens of sub-indices, but no need for civilians to dig through these. The numerical values found in the surveys are just “better” or “worse” from the respondent — none of the aching and constantly revised calculations of GDP.
What do this round’s numbers show?
Last Friday, July 1, the manufacturing survey taken at the end of June rose nicely to 53.2 from May’s 51.3.
Manufacturing is under pressure from overseas competition and from a strong dollar, but there’s nothing wrong with 53.2.
On July 6 came services — at least 70 percent of the economy, and hardly burger-flipping; this data is inclusive of Google. May had been a thin 52.9, forecast to rise to 53.4 — and instead blew out to 56.5.
U.S. incomes are still under pressure. We have a lot of under-employment. The outside world from Europe to Japan, China to emerging nations, is in a lot of trouble.
But, take nothing more than a glance at the two ISM surveys, and you and clients can know that the U.S. is OK — really, a notch better than OK.
Lou Barnes is a mortgage broker based in Boulder, Colorado. He can be reached at lbarnes@pmglending.com.
