In part because it is always released on the first business day of the month, investors typically tend to focus a lot of attention on the ISM Manufacturing report. Interestingly, they tend to focus much less attention on the ISM Non-Manufacturing, which is usually released on the third business day of the month. This is especially noteworthy given the fact that Manufacturing makes up a much smaller percentage of the US economy than the services sector. At the very least, based on the makeup of the US economy, investors should focus as much, if not more, on the ISM Non-Manufacturing report than they do on the ISM Manufacturing report.
With the above in mind, yesterday's better than expected ISM Non-Manufacturing report was a bright spot for investors concerned about a potential slowdown in the economy. Not only was the report better than expected (53.7 vs. 53.5), but it also showed a modest acceleration in growth (from 53.5 to 53.7). Looking at each of the ISM Non-Manufacturing Index's subcomponents, we found five rose in the last month, four declined, and one was inline. Compared to the last year, the results were less positive, as only three subcomponents increased, six declined, and one was unchanged.
Lastly, combining the ISM Manufacturing and Non Manufacturing Indices and weighting them for their overall weight in the US economy (last line) shows that the pace of economic activity in May was the same as in April (53.7). Therefore, according to the ISM reports, while economic activity in the US did not accelerate during the month of May, it did not slow either.
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