ISM services in May at 53.7 was slightly above expectations of 53.4 and up a touch from 53.5 in April and vs 56.0 in March. It’s certainly a ‘phew’ moment in that it wasn’t much weaker in light of the growing economic fears. Business Activity rose 1 pt to 55.6 but is still down from 58.9 in March. New Orders rose 2 pts to 55.5 while Backlogs were flat. The Employment component fell 3.4 pts to 50.8, a 5 month low and squares with the lackluster payroll report last Friday. Export Orders fell 5 pts but after inexplicably rising 5.5 pts in March. Prices Paid fell below 50 for the 1st time since July ’09. Of the 18 industries surveyed, 13 reported growth and 3 contraction with the balance seeing no change. ISM said “the majority of the respondents’ comments are positive and optimistic about business conditions and the direction of the economy.” This quote in the face of a clearly slowing global economy and European debt mess shows quite a disconnect where service sector exec’s apparently see daylight thru the tunnel while some see a high speed train.
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