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The latest report from the Institute of Supply Management (ISM) reveals a contraction in the non-manufacturing sector, as indicated by a drop in the Purchasing Managers’ Index (PMI). The actual number for the ISM Non-Manufacturing PMI came in at 50.0.
This figure falls notably short of the forecasted number of 51.8, suggesting a slowdown in the non-manufacturing sector. A reading above 50 percent generally indicates expansion, while a reading below 50 indicates contraction. Thus, the actual figure of 50.0 suggests the non-manufacturing sector is barely maintaining its growth.
In comparison to the previous ISM Non-Manufacturing PMI number, which was 52.0, the current reading indicates a slight contraction in the sector. This decrease in the PMI number implies a slower pace of business activity, new orders, employment, and supplier deliveries within the non-manufacturing sector.
The ISM Non-Manufacturing PMI is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted), and Supplier Deliveries. The report is compiled from monthly replies to questions asked of more than 370 purchasing and supply executives in over 62 different industries.
The contraction in the non-manufacturing sector, as indicated by the ISM Non-Manufacturing PMI, can potentially have negative implications for the U.S. dollar. A lower than expected reading is generally considered bearish for the USD.
The ISM Non-Manufacturing PMI is a crucial indicator of the overall economic condition for the non-manufacturing sector. It is based on each industry’s contribution to Gross Domestic Product (GDP), making it a vital tool for investors and analysts to gauge the health of the U.S. economy.
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