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Economy in Brief

ISM Non-Manufacturing Index Higher Again
by Tom Moeller April 1, 2005

The Institute for Supply Management reported that in March the Business Activity Index for the non-manufacturing sector rose for the second consecutive month to 63.1 from 59.8 the prior month.

Since the series' inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.

The new orders index rose to 62.1 while the employment sub index fell moderately m/m from the series' high in February. 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.

Pricing power eased again m/m to the lowest level in a year.

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 Mar Feb Mar '04 2004 2003 2002
Business Activity Index 63.1 59.8 64.0 62.4 58.2 55.1
Prices Index 65.6 66.4 64.8 69.0 56.8 54.0
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