The June 2013 Non-Manufacturing ISM Report On Business® shows a slowing in NMI™ to 52.2%, well below the Bloomberg NMI consensus figure of 54.5%.

ISM at a Glance

Non-Manufacturing Manufacturing
Index June May Percentage Point Change Direction Rate of Change Trend in Months June May Percentage Point Change
NMI™/PMI™ 52.2 53.7 -1.5 Growing Slower 42 50.9 49 1.9
Business Activity/Production 51.7 56.5 -4.8 Growing Slower 47 53.4 48.6 4.8
New Orders 50.8 56 -5.2 Growing Slower 47 51.9 48.8 3.1
Employment 54.7 50.1 4.6 Growing Faster 11 48.7 50.1 -1.4
Supplier Deliveries 51.5 52 -0.5 Slowing Slower 6 50 48.7 1.3
Inventories 54.5 51.5 3 Growing Faster 5 50.5 49 1.5
Prices 52.5 51.1 1.4 Increasing Faster 45 52.5 49.5 3
Backlog of Orders 52 51.5 0.5 Growing Faster 5 46.5 48 -1.5
New Export Orders 47.5 50 -2.5 Contracting From Unchanged 1 54.5 51 3.5
Imports 53.5 49.5 4 Growing From Contracting 1 56 54.5 1.5
Inventory Sentiment 61.5 62.5 -1 Too High Slower 193 N/A N/A N/A
Customers’ Inventories N/A N/A N/A N/A N/A N/A 45 46 -1

ISM Discussion

New orders plunged 5.2 percentage points to 50.8%, barely above contraction. The Business Activity Index registered 51.7 percent, 4.8 percentage points lower than the 56.5 percent reported in May. Yet, the employment index surged to 54.7% from 50.1%.

I expect this divergence to resolve to the downside.

Mike “Mish” Shedlock