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Is the ISM index pointing to a retrenchment in employment?  If his is any guide that might very well be the case  David Rosenberg elaborates:

“The ISM is useful because it is timely, highly cyclical, moves in regular patterns and goes all the way back to 1948!  But here’s the rub. Never before have we hit a peak in ISM with employment growth still negative. That has never happened prior to this post-bubble experience. What is normal, and there are 15 ISM cycles over the past 62 years, is that job growth is positive at the ISM peak, and that peak, more often than not, is around 60 as was the case this time around in April.

On average, at the peak in ISM, year-over-year payroll growth is running at 3% and has another six months to go in terms of acceleration before the trend reverses. The median is 2.5%, as is the mode. And, the range is +1.0-5.3%. This time around, the pace was -1.1%. This means that not only will we never get back to the old pre-recession highs in employment, but that the jobless rate is going to grind ever higher in coming quarters and, in turn, that means so long as the laws of supply and demand are still relevant as far as the labour market is concerned, wages move from disinflation towards outright deflation.”

Source: Gluskin Sheff