US: Strong showing by ISM nonmanufacturing index - Nomura

Analysts at Nomura note that US ISM nonmanufacturing index increased to 57.4 in June, slightly above consensus (Nomura: 57.0, Consensus: 56.5), from 56.9 of the prior month.

Key Quotes

“The subindexes indicate broad-based strength. The business activity index remained highly elevated at 60.8, up 0.1pp from May, indicating improving business activity in the month. The new orders index increased to 60.5 from 57.5, implying further momentum in coming months. The prices paid index increased 2.9pp to 52.1 from 49.2, indicating increasing prices after some easing in May.”

“The employment indicator remained elevated at 55.8 although 2.0pp lower than the prior month. The strength in this indicator points to continued strength in hiring activity in the nonmanufacturing sector. However, anecdotal evidence in the ISM report suggests continuing labor shortages in the construction industry, driving cost increases. The oil & gas sector reported a continued increase in activity, while the healthcare industry appears to be grappling with a high degree of uncertainty regarding the repeal and replacement of the Affordable Care Act. The retail trade industry reported an improved business outlook, which appears to support a possible rebound in June retail sales, set for release next week on Friday.”