June 6, 2017

May 2017 ISM Non-Manufacturing: 56.9 Percent, Down From April’s 57.5 Percent

Filed under: Economy — Tom @ 9:35 am

From the Institute for Supply Management (bolds and most paragraphs breaks added by me):

Economic activity in the non-manufacturing sector grew in May for the 89th consecutive month, say the nation’s purchasing and supply executives in the latest Non- Manufacturing ISM® Report On Business®.

The NMI® registered 56.9 percent.

The Non-Manufacturing Business
Activity Index decreased to 60.7 percent, 1.7 percentage points
lower than the April reading of 62.4 percent, reflecting growth
for the 94th consecutive month, at a slower rate in May. The New Orders Index registered 57.7 percent, 5.5 percentage points lower than the reading of 63.2 percent in April.

The Employment Index increased 6.4 percentage points in May to 57.8 percent from the April reading of 51.4 percent. The Prices Index decreased 8.4 percentage points from the April reading of 57.6 percent to 49.2 percent. The majority of respondents’ comments continue to indicate optimism about business conditions and the overall economy. The 17 non-manufacturing industries reporting growth in May.

The New Orders Drop to a level still in the high-50s would be more of a problem if it weren’t for the fact that Backlog of Orders jumped from 53.5 percent to 57.0 percent in May. One could argue that expanding but not booming levels in both index elements is a good thing, and should reflect a more predictable pace of business.

Also worth noting: Respondents say that import and export activity slowed down in May. That may signal more in-country supplier and customer reliance, or it may be an indicator of a slowdown.

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