ISM Non-Manufacturing Index At Multi-Year Low

ISM non-manufacturing has consistently reported very solid rates of growth but it too is at a multi-year low, down a sizable 1.4 points in July to 53.7 which is a 3-year low and comes up well short of the bottom end of Econoday's consensus range.

Yet rates of growth, though moderating, are still respectable, safely above breakeven 50 at 54.1 for new orders and 56.2 for employment which for any other diffusion report right now would be very positive. And unlike most reports, this sample continues to report rising prices for inputs, at 56.5 though 2.4 points slower than June. Nevertheless, business activity (equivalent to a production reading in manufacturing) slowed very sharply, down more than 5 points to 53.1 which is below the composite.

Though it does fit in with the general slowing underway in global diffusion reports, this isn't a bad report and is a reminder that domestic demand in the second-quarter, running at a 4.3 percent inflation-adjusted growth rate, was very strong.