Today’s release of the May ISM Services report showed a slightly larger than expected decline, falling from 57.5 down to 56.9 and below the consensus expectation of 57.0.  On a combined basis, accounting for each sector’s share of the overall economy, the May ISM dropped to 56.7 from 57.2.

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Commentary in this morning’s report was mixed, although definitely biased to the positive side (yellow highlights below).

The table below shows the internals of this month’s report on both a m/m and y/y basis.  On a m/m basis, just four components increased in May, while just three declined on a y/y basis.  The biggest m/m gainers this month were Employment and Backlog Orders (charts below).  In the case of Employment, it’s probably a good thing that traders hadn’t seen this report prior to last Friday’s employment report otherwise expectations for the report would have been even stronger.  For Backlog Orders, that component rose to its highest level of the recovery surpassing the previous high from the Summer of 2015. To the downside, the biggest losers this month were Export Orders (which was surprising given the dollar’s weakness), Prices Paid and New Orders (charts below).

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