Non-Manufacturing Services ISM Fails to Meet Expectations; New Orders Plunge

The June 2013 Non-Manufacturing ISM Report On Business® shows a slowing in NMI™ to 52.2%, well below the Bloomberg NMI consensus figure of 54.5%.

ISM at a Glance

Non-Manufacturing							Manufacturing
Index	June	May	Percentage Point Change	Direction	Rate of Change	Trend in Months	June	May	Percentage Point Change
NMI™/PMI™	52.2	53.7	-1.5	Growing	Slower	42	50.9	49	1.9
Business Activity/Production	51.7	56.5	-4.8	Growing	Slower	47	53.4	48.6	4.8
New Orders	50.8	56	-5.2	Growing	Slower	47	51.9	48.8	3.1
Employment	54.7	50.1	4.6	Growing	Faster	11	48.7	50.1	-1.4
Supplier Deliveries	51.5	52	-0.5	Slowing	Slower	6	50	48.7	1.3
Inventories	54.5	51.5	3	Growing	Faster	5	50.5	49	1.5
Prices	52.5	51.1	1.4	Increasing	Faster	45	52.5	49.5	3
Backlog of Orders	52	51.5	0.5	Growing	Faster	5	46.5	48	-1.5
New Export Orders	47.5	50	-2.5	Contracting	From Unchanged	1	54.5	51	3.5
Imports	53.5	49.5	4	Growing	From Contracting	1	56	54.5	1.5
Inventory Sentiment	61.5	62.5	-1	Too High	Slower	193	N/A	N/A	N/A
Customers' Inventories	N/A	N/A	N/A	N/A	N/A	N/A	45	46	-1

ISM Discussion

New orders plunged 5.2 percentage points to 50.8%, barely above contraction. The Business Activity Index registered 51.7 percent, 4.8 percentage points lower than the 56.5 percent reported in May. Yet, the employment index surged to 54.7% from 50.1%.

I expect this divergence to resolve to the downside.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com