U.S. ISM Services PMI Increases Sharply in June
by:Tom Moeller
|in:Economy in Brief
Summary
- Composite index improves to highest level in four months.
- Business activity & employment readings strengthen.
- Prices index continues to decline.
Service sector business activity in the U.S. economy improved last month, according to the Institute for Supply Management. The ISM Services PMI rose to 53.9 in June from 50.3 in May. The index hit a low of 49.2 In December. While increased, the reading remained well below its peak of 67.6 in November 2021. A reading above 50 represents an increase in activity. The Action Economics Forecast Survey expected 51.3 for June.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Monday. This index rose to 53.0 in June after falling to 49.9 in May. These readings remain down from the record 66.9 in November 2021. The series dates back to July 1997.
In the latest services survey, the business activity measure rose to 59.2 from 51.5 in May. It was the highest level since January as an increased 29.1% (NSA) of respondents reported better activity and a lessened 9.7% reported deterioration. The employment index rose to 53.1 from 49.2 in May. It was the highest reading since February. An increased 22.2% of respondent reported more hiring while a lessened 12.1% reported a decline. The new orders reading of 55.5 was improved after declining to 52.9 in May, but failed to recover that month’s decline. The supplier deliveries index eased minimally to 47.6 and remained well below the October & November 2021 high of 75.7.
The prices index fell to 54.1 in June after declining to 56.2 in May. The index remained well below the record 84.5 in December 2021 and at the lowest level since March 2020. A lessened 21.9% of respondents (NSA) reported price gains while a higher 9.6% reported price declines.
Additionally, the new export orders index rose to 61.5 in June after falling to 59.0 in May. The reading was the highest in four months, after plunging to 43.7 in March. The imports index rose to 54.6 from 50.0 in May. The order backlog series rose to 43.9 after its drastic fall to 40.9 in May. It remained down from a record 67.3 in October 2021. Working the other way, the inventory change index fell to 55.9 after surging to 58.3 in May. These series are not seasonally adjusted and are not included in the ISM Services PMI total.
The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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