Those who think the U.S. Federal Reserve should be raising interest rates aren't getting a lot of help from the data on which the central bank professes to be so dependent.
Tuesday brought a fresh batch of economic weakness on which the Fed can feast. The ISM non-manufacturing index plunged to a six-year low reading of 51.4, a number that provides a double gut punch to the economy after last week's manufacturing reading showed a stunning outright contraction in that sector. (The non-manufacturing reading indicates the sector is still barely in expansion.)
The release quickly tanked market expectations that the Federal Open Market Committee, during its meeting Sept. 20-21, might enact the second rate hike since December. Traders now put just a 15 percent chance on a move this month, and actually now don't believe the FOMC will hike at all this year, reducing December's probability to 46.9 percent.
Coupled with other recent weak data points, Tuesday's ISM number "should all but rule out any possibility of a September rate hike," said Paul Ashworth, chief U.S. economist at Capital Economics.
One of the big reasons: Even though trackers, such as the Atlanta Fed's, show third-quarter GDP growth coming in north of 3 percent, the ISM readings are consistent with something on the lines of 0.5 percent.
"The mistake we made in the second quarter was trusting the incoming monthly activity data we had that, right up until the last minute, pointed to a strong showing from second-quarter GDP growth. In contrast, the surveys were pretty weak and suggested that growth wouldn't be much above 1 percent annualized," Ashworth said of a period where growth was just 1.1 percent. "This makes us very nervous for the third quarter."