US Non-manufacturing: Capacity looks increasingly constrained – Wells Fargo

The ISM non-manufacturing index rebounded nearly two points in May to 58.6. Today’s US data showed that the ISM non-manufacturing index rose to 58.6 in May. According to analysts Wells Fargo, current activity and new orders picked up, putting further strains on rapidly tightening capacity. They also saw price concerns intensifying.

Key Quotes:

“Broad economic activity picked up in May according to the ISM non-manufacturing survey. The composite index nearly rebounded back to its March level, coming in at 58.6.

“Capacity looks increasingly constrained. Backlogs are rising at the fastest pace in the non-manufacturing survey’s 20+ year history, while supplier delivery times are increasing at the strongest clip of this expansion.

“The prices paid component jumped to 64.3. We expect price pressures to remain a concern given the lengthening in supplier delivery times and growing backlogs.”