ISM Non-Manufacturing Gauge Hits Three-Year Low

Economic activity in non-manufacturing, a sector that ranges from real estate to construction and entertainment, grew at a slower pace in July than expected as the Institute for Supply Management’s gauge hit the lowest level in almost three years.

The ISM’s non-manufacturing index fell 1.4 points from the month before to 53.7%, the lowest level since the August 2016 print of 51.8%. The consensus on Econoday was for a reading of 55.5%.

The business activity last month fell to 53.1% from June’s reading of 58.2%, while new orders fell 1.7 points to 54.1%. The measure of employment rose 1.2 points to 56.2%, and prices fell 2.4 points to 56.5%. indicating the 26th-straight monthly increase in prices.

“The non-manufacturing sector’s rate of growth continued to cool off,” said Anthony Nieves, chair of the ISM’s non-manufacturing business survey committee. “Respondents indicated ongoing concerns relate to tariffs and employment resources. Comments remained mixed about business conditions and the overall economy.”

The ISM said that even with the slower growth, the main gauge showed expansion for the 114th-consecutive month by posting a reading above 50.

Separately on Monday, the seasonally adjusted IHS Markit Services PMI for the US “signaled a solid start” for the second half of the year in July with a print of 53, up from June’s reading of 51.5 and ahead of the 52.2 view from Econoday.

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