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Economy in Brief

ISM Nonmanufacturing Index Slipped
by Tom Moeller September 3, 2004

The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0.

Since the series' inception in 1997 there has been a 60% correlation between the Business Activity Index and the q/q change in GDP services plus construction.

Despite the decline in the Business Index, the employment index recovered 2.5 points of the sharp 7.4 point July drop. Higher employment was reported by the same 18% of firms as in July. Since the series' inception in 1997 there has been a 61% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.

The new orders index slipped to 58.6 from the record high of 66.4 in July.

Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

The seasonally adjusted prices index fell to 70.0 versus 73.1 in July and the record high of 74.6 sin June.

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 Aug July Aug '03 2003 2002 2001
Business Activity Index 58.2 64.8 63.8 58.1 55.1 48.9
Prices Index 70.0 73.1 56.2 56.7 53.9 51.5
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