According to the latest Institute for Supply Management Report On Business, economic activity in the services sector, including retail, expanded in July for the sixth consecutive month as the sector’s Purchasing Managers Index registered 52.7% down from 53.9% in June.
In announcing the reading, Anthony Nieves, chair of the ISM Services Business Survey Committee, stated, “The composite index indicated growth in July for the seventh consecutive month after a reading of 49.2% in December, which was the first contraction since June 2020. The Business Activity Index registered 57.1%, a 2.1-percentage point decrease compared to the reading of 59.2% in June. The New Orders Index expanded in July for the seventh consecutive month after contracting in December for the first time since May 2020. The figure of 55% is 0.5 percentage points lower than the June reading of 55.5%. The Supplier Deliveries Index registered 48.1%, 0.5 percentage points higher than the 47.6% recorded in June. In the last six months, the average reading of 47.6% with a low of 45.8% in March reflects the fastest supplier delivery performance since June 2009, when the index registered 46%.”
He noted that Supplier Deliveries is the only ISM Report On Business index that is inversed, with a reading of above 50% indicating slower deliveries, which is typical as the economy improves and customer demand increases.
“The Prices Index was up 2.7 percentage points in July, to 56.8 %. The Inventories Index expanded in July for the third consecutive month, after one month of contraction preceded by two months of growth and eight months of contraction from June 2022 to January 2023. The reading of 50.4% is down 5.5 percentage points from June’s figure of 55.9%. The Inventory Sentiment Index, 56.6%, up 2.6 percentage points from June’s reading of 54% expanded for the third consecutive month after one month of contraction preceded by four months of growth, with a four-month period of contraction before that. The Backlog of Orders Index registered 52.1%, an 8.2-percentage point increase compared to the June figure of 43.9%. There has been a slight pullback in the rate of growth for the services sector. This is due mostly to the decrease in the rate of growth for business activity, new orders and employment, as well as ongoing faster delivery times. The majority of respondents are cautiously optimistic about business conditions and the overall economy.”
The 14 services industries that reported growth in June were Other Services; Construction; Accommodation and Food Services; Public Administration; Management of Companies and Support Services; Transportation and Warehousing; Utilities; Real Estate, Rental and Leasing; Professional, Scientific and Technical Services; Health Care and Social Assistance; Educational Services; Retail Trade; Information: and Wholesale Trade. The industries reporting contraction were Mining: Agriculture, Forestry, Fishing and Hunting; Arts, Entertainment and Recreation; and Finance and Insurance.
