The Institute for
Supply Management (ISM) reported on Wednesday its non-manufacturing index (NMI)
came in at 45.4 in May, which was 3.6 percentage points higher than the April
reading of 41.8 percent. The May reading pointed to the continued contraction
in the non-manufacturing sector for the second consecutive month.
Economists forecast the index to increase to 44.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.
Of the 18 manufacturing industries, 14 reported decreases last month, the ISM said, adding that respondents remained concerned about the ongoing impact of the coronavirus and many of them were hoping and/or planning for a resumption of business.
According to the report, the ISM’s non-manufacturing business activity measure rose 15 percentage points from April’s figure to 41 percent in May. The new orders gauge came in at 41.9 percent; 9 percentage points higher than the April’s reading. The Employment Index increased by 1.8 percentage points to 31.8 percent from the April reading. The Prices Index of 55.6 percent was 0.5 percentage point higher than the April reading, indicating that prices increased in May. Meanwhile, the Supplier Deliveries Index registered at 67 percent, down 11.3 percentage points from April’s all-time-high reading of 78.3 percent, continued to elevate the composite NMI.
Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for May (45.4 percent) corresponds to a 1.1-percent decrease in real gross domestic product (GDP) on an annualized basis.”
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