The ISM Non-manufacturing report for June 2011 is out. The overall index decreased to 53.3%, -1.3 points lower than May's 54.6%. This report is also referred to as the services index, or service sector index. By taking a look at 2011 as a whole in the graphs below, it appears the services sector is slowing down.
New orders decreased -3.2 percentage points to 53.6% with Business activity dropping -0.2 to 53.4%. This is a slowing of the services sector. Yet, here we are again, a sluggish mire of recession like slow growth. Below is the table from the ISM services report, edited.
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE JUNE 2011 | ||||||
|---|---|---|---|---|---|---|
| Index | Series Index June |
Series Index May |
Percent Point Change |
Direction | Rate of Change |
Trend (Months) |
| NMI/PMI | 53.3 | 54.6 | -1.3 | Growing | Slower | 19 |
| Business Activity/Production | 53.4 | 53.6 | -0.2 | Growing | Slower | 23 |
| New Orders | 53.6 | 56.8 | -3.2 | Growing | Slower | 23 |
| Employment | 54.1 | 54.0 | +0.1 | Growing | Faster | 10 |
| Supplier Deliveries | 52.0 | 54.0 | -2.0 | Slowing | Slower | 15 |
| Inventories | 53.5 | 55.0 | -1.5 | Growing | Slower | 5 |
| Prices | 60.9 | 69.6 | -8.7 | Increasing | Slower | 23 |
| Backlog of Orders | 48.5 | 55.0 | -6.5 | Contracting | From Growing | 1 |
| New Export Orders | 57.0 | 57.0 | 0.0 | Growing | Same | 10 |
| Imports | 46.5 | 50.5 | -4.0 | Contracting | From Growing | 1 |
| Inventory Sentiment | 58.5 | 55.0 | +3.5 | Too High | Faster | 169 |
Below is the graph for the non-manufacturing ISM business activity index, which shows a mired in a rut slowing.
New orders dropped, and generally 50% is the inflection point between expansion and contraction.
Contrast the above with the employment index. Remember anything below 50 means contraction or in the case of workers, firing people. The below graph has been normalized to 50, the ISM inflection point for expansion versus contraction. Yeah, jobs are a flat line, even though the employment index increased 0.1 percentage point.
Fourteen industries reported increased employment, three industries reported decreased employment, and one industry reported unchanged employment compared to May. Comments from respondents include: "Continuing to fill backlog of positions" and "Hiring to get back to required staffing levels."
Prices paid by the services sector plunged 8.7 percentage points to 60.9. This should help with inflation and profit margins.
31% of those surveyed do not have or monitor inventories. Yet inventory sentiment, increased 3.5 percentage points to an overall reported too high. Changes in inventories does affect U.S. GDP. Below is the graph for inventory sentiment, an indicator if companies will reduce inventories in the future.
To read more sub-indices and details see the actual report (although no eye candy from the ISM).
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