Wall Street received some good economic news for a change this morning, as the Institute for Supply Management reported, some 30 minutes into the trading session, that non-manufacturing activity had increased modestly in July, rising to a reading of 54.3, from 53.8 in June. That gauge was better than the more tepid increase, to 53.0, that had been widely forecast.
(It should be noted that an ISM reading of 50.0, or more, suggests that non-manufacturing activity is increasing; a reading between 42.0 and 50.0 indicates that the services sector is contracting, but that the aggregate economy is still growing; a reading below 42.0 suggests that not only is non-manufacturing activity declining, but that the economy, itself, is in recession.)
Meanwhile, several key components of the overall index also registered increases, including new orders (56.7 in July versus 54.4 in June), new export orders (52.0 versus 48.0), prices (52.7 versus 53.8), employment (50.9 versus 49.7), and supplier deliveries (52.0 versus 53.0). What's more, a number of individual industries in the non-manufacturing, or services, sector reported increased activity. Included here were rental and leasing, arts, entertainment, retail trade, information, public administration, health care and social assistance, educational services, and finance.
The moderate month-to-month improvement also represented the seventh month in a row that this gauge of activity had come in above 50.0, having ranged during this time from a high of 55.4 during March, April, and May, to a low of 50.5 in January. The average for the past 12 months is 52.0, with the range being from a low of 48.2 to the aforementioned multi-month high of 55.4.
Such readings suggest that this important sector is improving, but not at an especially strong pace. That would put this gauge in line with the companion manufacturing survey, also issued by the ISM, which was recorded at 55.5 in July, and has held in the mid-to-upper 50 range so far this year.
The non-manufacturing and manufacturing survey results are also consistent with the overall economic findings of late, which suggest that the nation is in a modest, and uneven, economic expansion that is likely to continue in the second half of this year, but at a pedestrian pace.
As for the stock market, the averages spiked up as the better-than-expected economic survey result was issued, with a modest gain transformed into an advance in the Dow Jones industrial Average of about 65 points. However, since that initial burst, the market has settled back to a much more modest gain in the Dow of some 10 points. The S&P and the NASDAQ are up in single digits, as well.