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Economy in Brief
Japan's Inflation Shows Mixed Gains
Japan's inflation rose by 0.4% in July...
U.S. Existing Home Sales Continue to Fall in July
Existing home sales declined 5.9% (-20.2% y/y) in July to 4.810 million units...
U.S. Index of Leading Indicators Fell Again in July
The Conference Board's Composite Leading Economic Indicators Index fell 0.4% m/m...
U.S. Philly Fed General Activity Index Back to Positive Reading in August
The current general activity diffusion index rose nearly 19 points in August to 6.2...
U.S. Unemployment Claims Slightly Lower
Initial claims for unemployment insurance went down 2,000 in the week ended August 13 to 250,000...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller August 3, 2005
The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month's improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a decline to 61.
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.
A employment index reversed just a piece of the June improvement and fell to a still firm 56.2. 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.
Moving the other way, the index of new orders jumped 2.4 points to 61.9, the highest level since March. Pricing power also surged. A 10.5 point gain m/m raised the index level to the highest level of this year (70.3).
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 | July | June | July '04 | 2004 | 2003 | 2002 |
---|---|---|---|---|---|---|
Business Activity Index | 60.5 | 62.2 | 63.4 | 62.4 | 58.2 | 55.1 |
Prices Index | 70.3 | 59.8 | 72.4 | 69.0 | 56.8 | 54.0 |