- Business activity index 53.3 versus 54.5 prior
- Employment 50.2 versus 51.1 prior
- New orders 53.0 versus 52.4 prior
- Prices paid 57.3 versus 57.0 prior
- Supplier deliveries 49.6 versus 47.6 prior
- Inventories 52.9 versus 49.8 prior
- Backlog of orders 43.7 versus 50.6 prior
- New export orders 50.9 versus 58.5 prior
- Imports 50.3 versus 53.3 prior
- Inventory sentiment 54.9 versus 63.2 prior
I used to love this indicator but here are three reasons why the ISM services index has become an unreliable indicator . That said, both indicators showed slight improvement in August, so that makes for a stronger signal.
Broadly, there is some weakness evident in manufacturing, rate-sensitive sectors and the bottom quintile of consumers but spending at levels above that appears to be holding up, though consumers do appear to be more-picky on pricing. That looks like a soft landing but it could always deteriorate and that's what the Beige Book seemed to indicate yesterday.
Notably, the employment reading fell close to 50 but it was under 50 for most of this year and non-farm payrolls continued to grow.
Comments in the report:
- “Generally, business is good. However, there are concerns of slowing foot traffic at restaurants and other venues where our products are sold.” [Agriculture, Forestry, Fishing & Hunting]
- “Housing market continues to be dampened by higher borrowing costs. All segments of the industry are affected. Single-family homes for sale, build for rent, and multifamily units are all feeling the effects.” [Construction]
- “Activity is increasing.” [Finance & Insurance]
- “Business continues to be strong.” [Health Care & Social Assistance]
- “Overall business is improving.” [Information]
- “Hiring of employees, contractors and consultants continues to decline as companies look to control costs during a period of economic and political uncertainty. Employee layoffs continue across a broad range of companies and industries.” [Management of Companies & Support Services]
- “Business has slowed, and it is harder than ever to find talent, but less jobs available as well.” [Professional, Scientific & Technical Services]
- “Up in business and activity.” [Transportation & Warehousing]
- “Steady interest rates are impacting investment in nonregulated business silos.” [Utilities]
- “High food costs are impacting customer demand, and weak sales performance has resulted in negative growth overall. Business activity is stable, and supplier costs are generally flat.” [Wholesale Trade]
The survey says this corresponds with 0.8% GDP growth and that compares to 2-2.5% in the S&P Global services survey.
