May U.S. ISM Non-Manufacturing Index Falls into Negative Zone at 48.2

US Economy | Written by CEP News | Jul 03 08 14:11 GMT |
(CEP News) - The services sector in the United States fell into contraction at 48.2 in June, against expectations that the index would see a third consecutive month of growth, according to the ISM Non-Manufacturing Index (NMI). Leading the decline was a record-low in employment, a record-high in prices paid, and a slowdown in new orders as well as production.

Economists had expected a reading of 51.0 in the headline.

The employment index hit a record-low at 43.8, down from 48.7, while prices surged to 84.5, another record-high, up from 77.0 in May. The NMI survey began in 1998.

New orders halted a three-month expansionary trend, falling to 48.6 in June from 53.6 in May.

The production/business activity halted a four-month expansionary trend by falling to 49.9, down from 53.6 in May.

Inventories fell back to 53.0 from a reading of 54.0 in the previous month.

Exports remained in growth but fell back to 52.0 following a rebound to 54.0 in the last report. Imports moved up to 50.5 from 48.0.

"Members' comments in June indicate that rising fuel, energy and commodity costs are negatively impacting their respective businesses. Respondents' comments are mixed on business conditions and the overall economy," said Anthony Nieves, chair of the Institute for Supply Management.

The percentage of respondents reporting higher prices is 72 percent, the percentage indicating no change in prices paid is 26 percent, and 2 percent of the respondents reported lower prices.

Taking Tuesday's manufacturing index into account, the ISM's manufacturing and non-manufacturing composite index remained unchanged from April at 48.4.

According to the ISM, a reading above 50 represents an expansionary situation while a score below 50 suggests a contractionary state.

The NMI is a nationwide survey of the services, construction and financial industries.

By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it

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