ISM Non-Mfg Index

Prior Consensus Consensus Range Actual Composite Index - Level 52.2  53.0  52.0  to 54.5  56.0

Highlights June's slowdown in new orders and business activity proved a one-month outlier as the ISM's non-manufacturing report shows a surge for both in July that drove the composite index up a very substantial 3.8 points to 56.0 for the best reading since February. New orders, the key component in the report, rose nearly 7 points to 57.7 for its best reading since December. Business activity really took off, up more than 7-1/2 points to 60.4, also the best reading since December. But some other readings are mixed as the rise in business activity, which is equivalent to a production index on the manufacturing side, made for a draw down in backlog orders which dipped more than 5 points to 46.5. Employment growth slowed a little bit, confirming Friday's slowing in payroll growth. Another reading of interest is prices paid which jumped more than 7-1/2 points to 60.1, in contrast to a flat result for this index in last week's ISM manufacturing report. A rise in prices is actually welcome given concern by many that inflation is too low. The Dow is moving off opening lows in immediate reaction to this report which comes out of the blue a little bit, pointing to strong acceleration underway for the economy right when expectations are looking for slowing.

Market Consensus before announcement The composite index from the ISM non-manufacturing survey for June was pulled down by a sharp decline in new orders, slowing to 52.2 versus May's 53.7. Any reading over 50 indicates monthly growth, although June's reading indicates a slower rate of growth than May. Growth in new orders came to a standstill with the index just barely over breakeven at 50.8 for the lowest reading of the recovery. There was a notable plus in the report and that was the employment index which jumped 3.6 points to a respectable 54.7. Other readings include a sharp slowing in business activity, a rise in inventories, and a dip in exports. Price pressures remain soft.