- 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.
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.
