August 3, 2017 – The ISM Non-Manufacturing Index helps determine overall conditions in the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries. The nonmanufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%. Readings above 50 indicate an expansion while readings below 50 signal decline.
The ISM Non-Manufacturing Index came in below the consensus of 56.9 at 53.9, well below the previous month of 57.4. New orders came in 5.4 points lower month-to-month at 55.1. The employment index dropped 2.2 points from June to July at 53.6. Business activity was at 55.9, down from 60.8. However, the non-manufacturing price index is up 3.6% month-to-month to 55.7.
Even though the ISM Non-Manufacturing Index fell over 6% in July, it’s reading above 50 still means the services sector is expanding. The expansion range has extended for 90 months and has shown no signs of dropping below the expansion level. A reading above 50 signals slower deliveries due to higher demand for services that can’t be met as quickly. 15 of the 18 industries have reported growth in July with Accommodation & Food Services being the highest and Finance & Insurance experiencing the lowest growth.