Chart of the Week: ISM Services Breakdown

Chart ISM Services Breakdown

This month’s ISM Services reading came in at a very strong 59.7. Prior to this report, the past few ISM readings had shown some weakness, which was a concerning sign for a domestic economy that is comprised of primarily service-based businesses. More concerning than the down trend in the headline Services PMI number was the sharper decline in some of the segments that roll up into the headline number, such as new orders and backlog. New orders give some insight into the spending businesses are experiencing, while backlog gives us details about how strong a company’s existing pipeline of work is. The fact that almost all of the reported segments rebounded so nicely is encouraging given some of the geopolitical and trade related risks that are looming. Overall, the report showed that the U.S. economy has entered 2019 on solid footing.