The June ISM services index fell to 53.8 from 55.4, was below the estimate of 55 and is at the lowest since Feb. The overall level though still remains a touch above the 10 yr average of 53.0 and still implies expansion. Business Activity fell 3 pts to a still high 58.1. New Orders dropped to 54.4 from 57.1 while Backlogs fell .5 pt to 55.5. The very important Employment component, where services make up 80%+ of the labor force, fell back below 50 to 49.7 from 50.4. Export Orders fell 5.5 pts to 48, the lowest since Feb. Prices paid fell by almost 7 pts to 53.8. Of the 18 industries surveyed, 15 saw growth. The ISM summed up the data well by saying “respondents comments are mostly positive about business conditions; however, there is concern about the effect of employment on the economic recovery.” This data point marks the last big report ahead of Q2 earnings season where we hear from the horse’s mouth on the state of the economic world.
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