ISM: No Recession in Services & Non-Manufacturing 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