The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business declined to 55.7 during May from an unrevised 57.8 in April. The latest figure was the lowest since April of last year and fell short of expectations for 57.0 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Monday. It fell sharply to 55.3, also the lowest level since last April. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.

Deterioration last month spread across the component series, led by a collapse in the supplier delivery index to 50.0. It showed the quickest delivery speeds in a year. The business activity reading of 59.5 was at its lowest point in three months. The new orders series fell modestly to 57.9. The employment index (55.3) deteriorated to its lowest point since January. During the last ten years, there has been an 88% correlation between the employment index and the m/m change in service plus construction payrolls.

The prices paid series improved to its highest point in nine months. Twenty percent (NSA) of respondents paid higher prices, a nine month high. Seven paid lower prices, the least since July.

The ISM data are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.