Datapoint Du Jour Takes Down Market

To begin with, yesterday afternoon ISM alerted reporters that it was moving up today’s release time from 10:00 a.m. to 8:55 a.m. — a highly unusual move — yet provided no explanation for the change.

And the data itself, when released at 8:55 a.m., showed a shocking decline in nonmanufacturing (think services) activity in January. Nearly every component of the survey moved from expansion to contraction. The business activity index dropped to 41.9 from 54.4. New orders dropped to 43.5% from 53.9. And employment dropped to 43.9 from 51.8. Readings under 50 indicate contractions.

Plus, this report marked the first addition of a new “overall” index that equally weighs the components business activity, new orders, employment, and supplier deliveries and is aimed to better track the U.S. economy. That debuted at 44.6 and caused some confusion about which “headline” number to report.

The atmosphere on this morning’s conference call was cantankerous. Reporters demanded an explanation for the change in the release time. Finally, ISM vice president Andrea Waas explained that “late yesterday” ISM was contacted and told that there could be “a possible breach of very, very general information related to the report,” in a private conversation that an individual involved “in making the release happen” had with another person who may or may not have even realized the information was leaked. But to prevent any individuals from making advantageous trades on the insider information, ISM decided to release the data this morning before the markets opened at 9:30 a.m.