The ISM services index (services make up about 80% of the labor market) was 46.4, 1.6 points less than estimates and down from 47 in June. Business Activity fell 2.7 points to 46.1 after almost reaching 50 in June. New Orders fell .5 point to 48.1 but off the highest reading since Sept ’08. Backlogs fell 4 points to 42. Employment fell almost 2 points from the highest since Sept ’08 to 41.5 (still well below 50). Export orders fell a sharp 7 points to 47.5 and has almost fully given back the June bounce. Prices Paid fell a sharp 12.4 points but because this is a services index, a change in commodity prices has much less of an impact. Notwithstanding the optimism in the capital markets, the ISM said “the majority of respondents’ comments reflect a sense of uncertainty and cautiousness about business conditions.” A common anecdote, from the ISM today, in a tough economy, “orders are being placed on hold pending economic recovery.” 7 of 17 industries surveyed reported growth in July.
