Economy

Service Sector Growth Slows in May Non-Manufacturing Report on Business (NMI)

Service sector employee, nurse at a hospital. (Photo: REUTERS)

The Non-Manufacturing Report on Business (NMI), a gauge of U.S. service sector activity by the Institute for Supply Management, expanded slowly in May. However, the NMI continued to show growth and 14 non-manufacturing industries show signs of resilience in a weakening U.S. economy. Non-manufacturing activity on the NMI fell to 52.9 in May, down 2.8% from 55.7 in April. Economists surveyed by The Wall Street Journal expected a smaller tick down to 55.5. A reading above 50 indicates that services activity is expanding, while a reading below 50 signals contraction. May marked the 76th month of expansion in the service sector of the economy, which covers everything from banking to burger chains.

ISM^® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM^® NON-MANUFACTURING AND ISM^® MANUFACTURING SURVEYS* MAY 2016
	Non-Manufacturing						Manufacturing
Index	Series Index May	Series Index Apr	Percent Point Change	Direction	Rate of Change	Trend (Months)**	Series Index May	Series Index Apr	Percent Point Change
NMI^®/PMI^®	52.9	55.7	-2.8	Growing	Slower	76	51.3	50.8	+0.5
Business Activity/Production	55.1	58.8	-3.7	Growing	Slower	82	52.6	54.2	-1.6
New Orders	54.2	59.9	-5.7	Growing	Slower	82	55.7	55.8	-0.1
Employment	49.7	53.0	-3.3	Contracting	From Growing	1	49.2	49.2	0.0
Supplier Deliveries	52.5	51.0	+1.5	Slowing	Faster	5	54.1	49.1	+5.0
Inventories	54.0	54.0	0.0	Growing	Same	14	45.0	45.5	-0.5
Prices	55.6	53.4	+2.2	Increasing	Faster	2	63.5	59.0	+4.5
Backlog of Orders	50.0	51.5	-1.5	Unchanged	From Growing	1	47.0	50.5	-3.5
New Export Orders	49.0	56.5	-7.5	Contracting	From Growing	1	52.5	52.5	0.0
Imports	53.5	54.0	-0.5	Growing	Slower	4	50.0	50.0	0.0
Inventory Sentiment	60.0	61.0	-1.0	Too High	Slower	228	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	50.0	46.0	+4.0
Overall Economy				Growing	Slower	82
Non-Manufacturing Sector				Growing	Slower	76

* Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries. ** Number of months moving in current direction. The 14 non-manufacturing industries reporting growth in May — listed in order — are: Health Care & Social Assistance; Accommodation & Food Services; Utilities; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Construction; Public Administration; Real Estate, Rental & Leasing; Management of Companies & Support Services; Information; Finance & Insurance; Retail Trade; Transportation & Warehousing; and Arts, Entertainment & Recreation. The four industries reporting contraction in May are: Mining; Other Services; Educational Services; and Professional, Scientific & Technical Services.

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.