The ISM non-manufacturing index released by the United States on Friday (3rd) fell to 55.9 in May, lower than the expected 56.4 and not as good as April’s 57.1. While the index remained firmly above the 50 line of growth and decline, it was the weakest performance since February 2021, implying a slowdown in business activity.
U.S. ISM non-manufacturing index in May:
- The business activity production index was reported at 54.5, the previous value was 59.1
- The new orders index was reported at 57.5, the previous value was 54.6
- The employment index was reported at 50.2, the previous value was 49.5
- The supplier delivery index was reported at 61.3, the previous value was 65.1
- The inventory index was at 51.0, the previous value was 52.3
- The price index of raw materials was reported at 82.1, the previous value was 84.6
- The outstanding orders index reported 52.0, the previous value was 59.4
- The new export orders index was reported at 60.9, the previous value was 58.1
- The import index of raw materials was reported at 52.8, the previous value was 52.9
- The inventory climate index was at 44.5, the previous value was 46.7
Looking at the data breakdown, the business activity production index slipped 4.6 points to a two-year low of 54.5, although another measure of demand, new orders, rose to 57.6. In addition, the index of outstanding orders fell 7.4 points to 52, indicating a gradual balance between supply and demand.
Consumers have so far continued to spend in the face of soaring prices, but high inflation, including gasoline prices, combined with higher borrowing costs might dampen discretionary spending in the months ahead.
The report showed that the raw material price index fell to 82.1 but was still at a high point, while the employment index rose slightly over 50 points to 50.2. The two data revealed that price pressures are still widespread and the labor market is still tight, but there are signs that two began to ease.