Just when I thought it was safe to give the all-clear sign on the road to recovery, the ISM Non-Manufacturing Index unexpectedly dipped from 47.0 in June to 46.4 in July.
The decline was small and the index is holding below 50, which marks the line between contraction and expansion, but most indicators and corporate commentary suggest a pick up in economic activity in the near term.
Furthermore, the trend continues in an upward direction as reflected in the chart above.
Notably, the prices component fell 12.4 points in July to 41.3, highlighting the lack of pricing power amid sluggish demand. In front of Friday’s labor report, the ISM said the employment component slipped from 43.4 to 41.5.
Overall, the decline is a letdown but not worrisome.
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