ISM nonmanufacturing PMI for May 55.9 vs. 56.4 estimate

• ISM non-manufacturing PMI 55.9 vs 56.4 estimate. Last month 57.1
• employment 50.2 vs 49.5 last month. 9 industries reported increases while 6 industries reported declines including retail trade, finance insurance, agricultural, information, management in companies and public administration
• new orders 57.6 vs 54.6 last month. 15 industries reported growth while 2 reported declines
• prices paid 82.1 vs 84.6 last month. All 18 industries reported increases in May for the 60th consecutive month
• business activity index 54.5 vs. 59.1 last month
• supplier deliveries 61.3 vs. 65.1 last month
• inventories 51.0 vs. 52.3 last month
• backlog of orders 52.0 vs. 59.4 last month (easing of orders)
• new export orders 60.9 vs. 58.1 last month
• imports and 52.8 vs. 52.9 last month
• inventory sentiment 44.5 vs. 46.7 last month

From the ISM:

In May, the Services PMI^®registered 55.9 percent, a 1.2-percentage point decrease compared to the April reading of 57.7 percent. The 12-month average is 61.2 percent, which reflects consistently strong growth in the services sector. This month’s reading, however, is the lowest figure since February 2021, when the index also registered 55.9 percent. The May reading indicates the services sector grew for the 24th consecutive month. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

What survey respondents are saying:

• “Supply chain improving, with more reliability of supplier deliveries. Inflationary pressures increased on goods and services. Employment also improving in most markets. Fewer daily fires and more planning time.” [Accommodation & Food Services]
• “Demand seems to be very high for all of the high-voltage electric products we purchase. Lead times are quadruple what they normally are.” [Construction]
• “Long lead times continue to plague equipment deliveries; higher prices or surcharges added to pricing proposals. The ban on Russian imports is causing a shortage of gasses, especially helium. There has been an increase in new college applicants, signaling a strengthening of the higher education sector.” [Educational Services]
• “The paper industry is still being hampered by employment issues, freight costs and scarcity of truckers, as well as the war in Ukraine. European paper sent to North America is being slashed due to the war and the lack of fiber, along with high energy costs. Mills in North America are still struggling to keep up with demand.” [Information]
• “Unstable prices on various commodities are making budgetary planning difficult. We are maintaining a cautious approach due to energy costs continuing to increase.” [Management of Companies & Support Services]
• “Demand for all labor types remains strong, as open positions continue to exceed candidates to fill those positions. Light industrial, heavy industrial and information technology labor roles are particularly difficult to fill. Companies are having to pay more and offer incentives to attract talent. Resignations continue at a record pace across all age groups, and baby boomer retirements continue to increase.” [Professional, Scientific & Technical Services]
• “Concerns about how the new COVID-19 subvariants and rising cases may impact staffing.” [Public Administration]
• “Chip shortage showing no signs of easing.” [Retail Trade]
• “Exhausting. Continuous shortages, transportation delays and price increases all contribute to the destruction of historical lead times and firm commitments on delivery dates. This requires placing orders earlier and qualifying secondary sources. It is relentless.” [Utilities]
• “National consumer and builder demand continues to drive sales domestically. COVID-19 in China continues to affect our supply chain more than the Russia-Ukraine war.” [Wholesale Trade]

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/ Inflation  / commodities