You are on page 1of 1

TD Economics

July 6, 2010

Data Release: ISM Non-Manufacturing takes a dip in June, but remains in expansionary territory

• ISM non-manufacturing index fell to 53.8 in June from 55.4 in May, showing a deceleration in growth for
the first time since November. The reading came in below expectations for a 55.0 print.
• All of the sub-indexes fell in June with the exception of supplier deliveries, which was unchanged at 53.
New orders fell for the third straight month to 54.4 from 57.1, still indicating growth but at a decelerating
pace.
• The employment sub-index, which had previously moved into slight expansionary territory, fell back
below 50 to 49.7. Export and import sub-indexes also fell below 50, both showing a reading of 48.0.
• The price paid sub-index fell dramatically from 60.6 to 53.8.
Key Implications
• This is the latest in a series of economic indicators pointing to a slowdown in economic activity heading
into the second half of 2010. While the index remains in expansionary territory the trend has been
towards deceleration.
• Declines in import and export sub-indexes echo movements seen in the ISM manufacturing index and
reveal the headwinds facing external trade from a slowdown in global growth.
• The employment sub-index’s dip into slight negative territory is unfortunate. The U.S. labor market has a
long-road ahead in repairing the damage of the Great Recession and given the continued unwind of
Census hiring over the next few months, the private sector will have to step in to pick up the slack.
• With little in the way of inflation pressures and a slowing pace of economic activity, expect the Federal
Reserve to remain focused on the employment side of its mandate. With every additional indicator that
points to a slowdown in economic or employment growth, the risk increases that a highly data
dependent Fed steps back into further quantitative easing.

James Marple, Senior Economist


416-982-2557

DISCLAIMER
This report is provided by TD Economics for customers of TD Bank Financial Group. It is for information purposes only and may not be appropriate for
other purposes. The report does not provide material information about the business and affairs of TD Bank Financial Group and the members of TD
Economics are not spokespersons for TD Bank Financial Group with respect to its business and affairs. The information contained in this report has
been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views,
including about future economic and fi nancial markets performance. These are based on certain assumptions and other factors, and are subject to
inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affi liates and related entities
that comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for
any loss or damage suffered.

You might also like