June ISM Non-Manufacturing Index Preview
The June ISM Non Manufacturing Index (NMI) is expected to fall to 51 in June following a 51.7 reading in May. The ISM NMI production index in June is expected at 52.5, which would indicate expansion but is below the 53.6 reading in May.
The ISM NMI employment index was 48.7 in May from 50.8 in April, the new orders index was 53.5 from 50.1, and the prices paid index was 77 from 72.1 in April. The NMI inventories index grew to 54 in May from 47 prior.
The ISM –NMI usually outperforms the ISM Manufacturing index, which came in at 50.2 in June after a 46.9 reading in May. Downside risks to the US economy continue to stack up as higher gas prices, falling home values and widespread consumer pessimism have made conditions uncertain, to say the least.
One of the few bright spots remaining is the services sector, whose recent performance might help the US economy skirt a recession — though it is too soon to say.
Other points to consider:
* The ISM NMI employment index could slip further in June after the June ADP employment report revealed a 79k drop in jobs today, with a 3k drop in the service sector.
* The boost in personal income as a result of the government stimulus package should provide a marginal boost for the June ISM-NMI index.
* The June ISM NMI Prices Paid index, which surged to 77 in May, is likely to face further upward pressure after May producer prices posted a higher than expected 1.4% increase.