Recent Updates

  • Finland: Bankruptcy Filings (May); Sweden: Economic Tendency Survey (Jun)
  • Germany: PPI (May)
  • Estonia: PPI, Export & Import Price Index (May); Georgia: PPI (May)
  • Malaysia: CPI (May); Taiwan: Foreign Investment (May); Singapore: Weather Statistics (May); Vietnam: First 15 Days of Trade (Jun); China: Telecommunication, IP Value Added by Region, Industrial Output (May)
  • more updates...

Economy in Brief

ISM Nonmanufacturing Index Up Again
by Tom Moeller May 3, 2006

In April, the Business Activity Index for the non-manufacturing sector rose a convincing two and one half points to the highest level since August, reported the Institute for Supply Management (ISM). The rise to 63.0 by far outpaced Consensus expectations for a decline to 59.5.

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

The new orders index jumped five points to 64.6, the highest level since 2004 while the employment index recouped about half of the prior month's decline with a rise to 56.5 and was up from the 2005 average of 55.9. 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 recovered all of the March decline and rose ten points to the highest level since November. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.

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 April Mar April '05 2005 2004 2003
Business Activity Index 63.0 60.5 60.4 60.1 62.5 58.3
Prices Index 70.5 60.5 64.1 67.9 68.8 56.6
close
large image