U.S. May ISM Services - Economy remains resilient
May’s ISM services index of 54.5 is up from 53.6 in April and a 3-month high. While we suspect seasonal adjustments flattered the data it provides further evidence of US economic resilience in the face of the energy shock.
The two components we suspect were flatted by seasonal adjustments saw significant gains, new orders to 57.3 from 53.5 and business activity to 57.7 from 55.9. Only new orders of the two increased before seasonal adjustment.
Employment remains quite weak at 47.9 from 48.0, suggesting we should not expect too much from the non-farm payroll despite some positive labor market signals in other recent data.
Delivery times at 55.2, down from 56.8, completed the breakdown of the composite. This suggests supply disruptions arising from the Middle East conflict have eased a little.
Prices paid were slightly firmer at 71.3 after two months at 70.7 but have not changed much since bouncing from February’s level of 63.0. May’s index is the highest since August 2022 so price pressures are significant.
