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Economy in Brief
U.S. Federal Government Budget Deficit Shrinks in July
The U.S. Treasury Department reported a federal budget deficit of $211.1 billion in July...
U.S. Mortgage Applications Rose Slightly in the Latest Week
Mortgage applications increased 0.2% (-62.9% y/y) from one week earlier...
German Inflation Rises
The German inflation rate as measured by the HICP accelerated to 8.4% in July...
U.S. Productivity Declines in Q2, Pushing Unit Labor Costs Higher
Nonfarm business sector productivity fell 4.6% (AR) during Q2'22...
U.S. Small Business Optimism Edged Up in July
The NFIB Small Business Optimism Index edged up to 89.9 in July...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller February 5, 2007
The non-manufacturing sector Business Activity Index rose more than expected to 59.0 last month and more than reversed the 1.6 point decline during December. Consensus estimates had been for a lesser gain to 57.0 and the figures from the Institute for Supply Management were revised to reflect revisions to seasonal factors.
The figure contrasts with the 2.1 point deterioration in the NAPM composite manufacturing index of factory sector activity for January.
Since the series' inception in 1997 there has been a 46% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The new orders sub-index and the employment index both fell during January, employment to the lowest level in a year. Since the series' inception in 1997 there has been a 56% 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 deteriorated a sharp 4.5 points to 55.2, the lowest level since October. 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 back to July 1997.
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 | January | December | Jan. '06 | 2006 | 2005 | 2004 |
---|---|---|---|---|---|---|
Business Activity Index | 59.0 | 56.7 | 59.1 | 58.0 | 60.2 | 62.5 |
Prices Index | 55.2 | 59.7 | 67.8 | 65.2 | 68.0 | 68.8 |