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Economy in Brief

ISM Non-Manufacturing Index Set New High
by Tom Moeller April 5, 2004

The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector jumped to a new series' high of 65.8 in March. Consensus expectations had been for a more moderate gain to 61.5 versus 60.8 in February.

Since the series' inception in 1997 there has been a 41% correlation between the Business Activity Index and the q/q change in the GDP Service Sector Quantity Index.

The employment index improved to 53.9, the eighth month in nine above 50. Only 8% of firms reported lower employment in March, the series' low.

Since the series' inception in 1997 there has been a 62% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing and construction industries.

The new orders index improved to 62.8 versus 60.3 in February. These figures have varied in a range between 60 and 65 since last July.

Business activity for the non-manufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.

The seasonally adjusted prices index jumped to 65.7 from 57.3 in February. It was the third highest reading on record.

ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.

ISM Nonmanufacturing Survey Mar Feb  Mar '03 2003 2002 2001
Business Activity Index 65.8 60.8 49.1 58.1 55.1 48.9
Prices Index 65.7 57.3 60.1 56.7 53.9 51.5
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