US ISM: Improvement in service sector shows divergence with manufacturing - Wells Fargo

Data released today showed the ISM non-manufacturing index climbed to 56.9 in May. Analysts at Wells Fargo point out that while it is still below its six-month average, the improvement in the service sector stands in contrast to the trend-decline in the manufacturing ISM. They noted hiring reached a 7-month high.

Key Quotes: 

“On Monday, we learned the ISM manufacturing index slipped to a two and a half year low in May with a number of respondents highlighting the impact of tariffs on the factory sector. Respondents in today’s non-manufacturing ISM noted concern over tariffs, though the business impact is limited. At 56.9 in May, the non-manufacturing points to a divergence and suggests the tariff impact is being felt more on the manufacturing side.”

“The employment component jumped 4.4 points to a seven-month high of 58.1, which is consistent with a healthy pace of hiring in May payrolls to be released Friday.”