We have been growing more and more used to economic reports showing near-recessionary levels or worse in recent weeks. The manufacturing and factory orders slowdown is one thing, but the newest report from the Institute for Supply Management shows that as of May there is still no recession pressure in the non-manufacturing sector of America. That is good news considering that America is each year becoming a services and post-industrial economy.
The May report on the Non-Manufacturing ISM Report On Business came out at 53.7%. That is both above the 50.0% line that derives growth versus contraction but it is also actually better than the Bloomberg consensus of 53.5%. Better yet, the three key measurements also were all above the 50.0% growth line: Business Activity Index at 55.6%; New Orders Index at 55.5%; and the Employment Index came in at 50.8%
Today’s news marks the non-manufacturing sector’s 29th consecutive month of growth. This is 0.2% higher than the 53.5% registered in April as well and it is indicative that the growth in May came in at a slightly faster rate in the non-manufacturing sector.
The Business Activity Index for May was 1 percentage point higher than in April, and that is 34th consecutive month of growth. The New Orders Index was up 2 points. There is a concern here that goes back to jobs and employment: the Employment Index fell by 3.4 percentage points to 50.8 percent and that indicates “continued growth in employment at a slower rate.”
The inflationary component was under the 50.0 reading as the Prices Index decreased 3.8 percentage points down to 49.8 percent. The ISM showed that this was lower month-over-month prices for the first time since July 2009.
JON C. OGG