U.S. non-manufacturing sector’s growth accelerates more than expected in July - ISM

The Institute for Supply Management (ISM) reported on Wednesday that its non-manufacturing index (NMI) came in at 64.1 in July, which was 4.0 percentage points higher than unrevised June’s reading of 60.1 percent. The latest reading pointed to the growth in the services sector for the 14th straight month, which was also the fastest on record.

Economists forecast the index to increase to 60.5 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 services industries, 17 reported gains last month, the ISM said, even though challenges with materials shortages, inflation, logistics and constrained labor pool continued to be an issue.

According to the report, the ISM’s non-manufacturing Production measure rose 6.6 percentage points to 67.0 percent from the June reading, while its New Orders gauge increased 1.6 percentage points to 63.7 percent and the Employment indicator went up 4.5 percentage points to 53.8 percent. Elsewhere, the Supplier Deliveries index advanced 3.5 percentage points to 72.0 percent, while the Inventories indicator decreased 0.7 percentage point to 49.2 percent. On the price front, the Prices index increased 2.8 percentage points to 82.3 percent, recording its second-highest reading ever, behind September 2005.

Commenting on the data, the Chair of the ISM Services Business Survey Committee, Anthony Nieves, noted, “The past relationship between the Services PMI and the overall economy indicates that the Services PM for July (64.1 percent) corresponds to a 5.2-percent increase in real gross domestic product (GDP) on an annualized basis.”