U.S. ISM non-manufacturing index likely to have risen in May

The U.S. ISM non-manufacturing index dropped in April, but it stayed strongly in expansion territory at 56.8. According to a Wells Fargo research report, the ISM non-manufacturing index is expected to have risen in May. In the prior month, new orders had rebounded, while current activity moderated and delivery times lengthened. Input prices also rose as cost pressures continued to rise outside of the manufacturing sector.

The employment component of the index also weakened compared to the impressive pace recorded over the past few months. While the hiring component of the index dropped in April, this is largely consistent with the view that there is little slack left in the labor market and employment growth should continue to downshift, noted Wells Fargo.

Activity outside the industrial sector grew at a slower rate in April. In spite of recording more temperate activity, the forward-looking new orders index rose last month, and the composite index continues to be at a level in line with strong economic growth. The ISM non-manufacturing index is likely to have risen to 58 in May, added Wells Fargo.

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