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Economy in Brief

ISM Non-manufacturing Index Rebounded
by Tom Moeller November 3, 2004

The Institute for Supply Management reported that the October Business Activity Index for the non-manufacturing sector rebounded 3.1 points to 59.8 following a 1.5 point decline in September. Consensus expectations had been for a more moderate gain to 58.0.

Despite the latest rise, the index remained well below its April high of 68.4.

Since the series' inception in 1997 there has been a 55% correlation between the Business Activity Index and the q/q change in GDP services plus construction.

The employment sub index rose again to 55.8, the highest level since June. Since the series' inception in 1997 there has been a 60% 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 also rose to 60.5, the highest since July and the seasonally adjusted prices index rose to 74.1.

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.

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.

ISM Nonmanufacturing Survey Oct Sept Oct '03 2003 2002 2001
Business Activity Index 59.8 56.7 63.3 58.1 55.1 48.9
Prices Index 74.1 67.1 58.9 56.7 53.9 51.5
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