The ISM Non-manufacturing report for May 2010 is out. The overall index flat lined to 55.4%, exactly the same as the last two months 55.4%.
The employment index finally went above 50, at 50.4% and increased 0.9% from last month. That's the first time in 28 months employment changed direction to growth. New orders slowed. While still above 50, 57.1, new orders decreased from last month, by -1.1%. The April report showed a -4.1% drop in new orders. Business activity hit 61.1, up 0.8%. Below is the employment index graph, normalized to zero for the expansion/contraction 50 inflection point, followed by a graph of new orders.
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE MAY 2010 | ||||||
|---|---|---|---|---|---|---|
| Index | Series Index May |
Series Index Apr. |
% Point Change |
Direction | Rate of Change |
Trend (Months) |
| NMI/PMI | 55.4 | 55.4 | 0.0 | Growing | Same | 5 |
| Business Activity/Production | 61.1 | 60.3 | +0.8 | Growing | Faster | 6 |
| New Orders | 57.1 | 58.2 | -1.1 | Growing | Slower | 9 |
| Employment | 50.4 | 49.5 | +0.9 | Growing | From Contracting | 1 |
| Supplier Deliveries | 53.0 | 53.5 | -0.5 | Slowing | Slower | 2 |
| Inventories | 62.5 | 54.5 | +8.0 | Growing | Faster | 2 |
| Prices | 60.6 | 64.7 | -4.1 | Increasing | Slower | 10 |
| Backlog of Orders | 56.0 | 49.5 | +6.5 | Growing | From Contracting | 1 |
| New Export Orders | 53.5 | 57.0 | -3.5 | Growing | Slower | 3 |
| Imports | 56.5 | 56.5 | 0.0 | Growing | Same | 3 |
| Inventory Sentiment | 60.5 | 53.5 | +7.0 | Too High | Faster | 156 |
The Prices Index decreased 4.1 percentage points to 60.6 percent in May, indicating that prices are still increasing but at a slower rate than in April.
The price index is what businesses must pay for raw materials, so increases cut into their profits and a decline is a little good news.
Here the ISM list of businesses that are hiring...and not:
The industries reporting an increase in employment in May — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; Retail Trade; Wholesale Trade; Information; Other Services; Finance & Insurance; Professional, Scientific & Technical Services; and Accommodation & Food Services. The industries reporting a reduction in employment in May are: Educational Services; Transportation & Warehousing; Health Care & Social Assistance; and Public Administration.
It seems the non-manufacturing sector is somewhat stalling in it's growth rate. It is still growing, but at the same levels, which isn't enough to really ramp up the economic growth needed to tackle the never ending unemployment problem. Also a second monthly decline of new orders is not a good sign. The good news is finally, finally the unemployment index went positive.
The ISM says 73% of respondents do not separate out export orders from all orders, so take that index with a grain of salt for implications of the trade deficit.
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