ISM Services Index Disappoints, Labor Component Falls

Unlike the ISM Manufacturing Index, which on Monday surpassed expectations as it jumped more than 4 points, led by expansionary trends in new orders and production posting, the ISM Non-Manufacturing Index performed worse in July than in June.

The sentiment-based index of the services, construction, and financial industries nudged down 0.6 points to 46.4 in July, as business activity, new orders, and employment were all lower. The consensus forecast was 48.2.

“The majority of respondents' comments reflect a sense of uncertainty and cautiousness about business conditions,” said Norbert Ore, spokesman for the report, as he noted this is the 10th straight overall decline in the index.

Business activity dropped 3.7 points to 46.1, New orders fell 0.5 points to 48.1, and Employment shed 1.9 points to 41.5. Moreover, exports fell a dramatic 7 points to 47.5.

“The results are disappointing, particularly after the pop in the manufacturing ISM,” commented Jennifer Lee from BMO Capital Markets. “Given that the nonmanufacturing sectors cover more ground â€