The May ISM services index was 44, 1 pt less than expected but up a
touch from April and is at the highest since Oct ’08. The Business
Activity component fell almost 3 pts to 42.4 but is in line with the 6
month avg and is about 9 pts above the Nov low. Unlike within the ISM
mfr’g, New Orders fell to 44.4 from 47 and Backlogs fell 4 pts to 40.
Employment did rise 2 pts to 39, still weak but it’s the highest since
Oct and the service sector makes up at least 80% of the labor force and
combining this with the ADP # gives me reason to believe that Friday’s
payroll # shouldn’t be that far from expectations. Export Orders fell
1.5 pts to 47 but exporting services is certainly different than
exporting goods so the ISM mfr’g # is more relevant with this category.
According to ISM, respondents comments remain mixed as some indicate
signs of stabilization, “while others continue to have a negative
outlook on the economy.”

Category: MacroNotes

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