Services industries sensitive to economic fluctuations

Sources: Bloomberg, Institute for Supply Management, and Wells Fargo Investment Institute. Monthly data from January 1, 2007 to June 30, 2022. The Institute for Supply Management (ISM) Manufacturing Index® is a composite index based on five indicators with equal weights. The ISM Non-Manufacturing Index® is a composite index based on four indicators with equal weights.

Key Takeaways

  • Service-industry activity lost momentum midway through the second quarter, apparently in response to headwinds from high inflation, rising interest rates and, perhaps, the latest wave of the pandemic.
  • Slowing growth in U.S. services and, to a lesser extent, manufacturing activity are yellow flags in the outlook, likely pointing toward slowing growth during the second half of the year.