Economist's Insights

ISM Non-Manufacturing Drops off Cliff

Aug 3, 2017

The July ISM Non-Manufacturing index disappointed, falling from 57.4 to 53.9 (exp. 56.9). The headline index now sits at its lowest level since last August and, combined with Tuesday’s manufacturing report from ISM, points to GDP growth below 2%.  The combined composite index was pointing to GDP growth accelerating above 3%.  The business activity and new orders indices both fell close to 5 points, sharp declines for critical subcomponents of the report.  The employment index dropped 2.2 points to 53.6, adding to the risk of a downside disappointment in Friday’s BLS job reports.  On one positive note, the inventory sentiment index rose 5.5 points signaling a 3Q rebound in inventories remains a likely boost to GDP growth.