EmailThe ISM Non-manufacturing index slowed in June, falling from 54.6 in May to 53.3. This is still above the 12-month low (52.8) reached in April but well below the 12-month high (59.7) from February. The Briefing.com consensus expected the index to fall to 54.0.
After rebounding in May, new orders slipped from 56.8 to 53.6 in June. At the same time, order backlogs contracted as the index fell from 55.0 in May to 48.5 in June.
Taken together, it was no surprise that business activity/production decelerated for the second consecutive month, declining from 53.6 in May to 53.4 in June. Unless new orders growth picks up next month, business activity will be in danger of contracting in July.
The employment index was marginally higher in June (54.0 vs. 54.1). Give the lack of correlation between the index and the payroll data, however, the surprise increase in the employment index should not factor into a stronger-than-expected June payroll gain.
