The ISM Non-manufacturing report for June 2010 is out. The overall index decreased to 53.8%, lower 0.7 than the the last three months 55.4%. The index is normalized to 50 for the most part. Above 50 means growth, below 50 implies economic contraction.
Employment is in contraction again, after one month of growth. New orders dropped -2.7% from last month. Below is the employment index graph, normalized to zero for the expansion/contraction 50 inflection point, followed by a graph of new orders.
The industries reporting an increase in employment in June — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Retail Trade; Management of Companies & Support Services; Wholesale Trade; Transportation & Warehousing; Health Care & Social Assistance; and Information. The industries reporting a reduction in employment in June — listed in order — are: Other Services; Utilities; Professional, Scientific & Technical Services; Finance & Insurance; Public Administration; Accommodation & Food Services; and Educational Services.
|ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE JUNE 2010|
|Backlog of Orders||55.5||56.0||-0.5||Growing||Slower||2|
|New Export Orders||48.0||53.5||-5.5||Contracting||From Growing||1|
|Inventory Sentiment||59.0||60.5||-1.5||Too High||Slower||157|
The NMI (Non-Manufacturing Index) registered 53.8 percent in June, 1.6 percentage points lower than the 55.4 percent registered in May, indicating continued growth in the non-manufacturing sector, but at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased 3 percentage points to 58.1 percent, reflecting growth for the seventh consecutive month. The New Orders Index decreased 2.7 percentage points to 54.4 percent, and the Employment Index decreased 0.7 percentage point to 49.7 percent, reflecting contraction after one month of growth. The Prices Index decreased 6.8 percentage points to 53.8 percent in June, indicating that prices are still increasing but at a slower rate than in May. According to the NMI, 15 non-manufacturing industries reported growth in June. Respondents' comments are mostly positive about business conditions; however, there is concern about the effect of employment on the economic recovery.
If you notice employment is mentioned repeatedly as a reason for the slow down in growth. See the post, The Great Double Dip Recession for some graphs showing how unemployment feeds into itself, reduces demand and slows the economy.