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Economy in Brief

Nonmanufacturing ISM: Sharp Two-Month Drop Off
by Robert Brusca April 4, 2007

ISM trends show a weakening trend in the services-mining-construction sector of the economy to add to the lethargy in manufacturing. The past two months show that the index has dropped to a much lower profile than before. This is the weakest activity recorded since early 2003. Employment trend has been ground into a lower profile as well. The results are disconcerting although it may be that ongoing construction problems are weighing on the index and services are not as weak as the index suggests.

An analysis of the position of the various ISM components in their respective ranges shows that weakness characterizes this sector. Both activity and orders are below their range midpoints and below their period average values. Order backlogs continue to appear strong as an offset, as we have seen in durable goods order report. Unlike the ISM manufacturing we see that export and import services are weak. For manufacturing these two series were quite firm. Price readings rose in the month and remain firm in their historic range. On balance, the nonmanufacturing sector does not appear to be as strong or supportive of the economy as it once was. It raises the question of whether the weakness in manufacturing and construction industries has ground down the once vibrant services sector that is nested within the nonmanufacturing ISM.

ISM Nonmanufacturing Statistics from January 1998 to Date
   
ISM-NMFG Current Std Dev Average SD %Avg MAX MIN Range Percentile % of AVG
PM Activity 52.4 4.7 57.5 8.2 67.9 40.5 27.4 43.4 91
New Orders 53.8 4.7 57.2 8.2 66.9 41.3 25.6 48.8 94
Backlogs 52.5 3.7 51.0 7.2 57.0 40.5 16.5 72.7 103
Supplier Deliveries 50.0 2.1 53.6 4.0 60.5 48.0 12.5 16.0 93
Inventory Sentiment 63.0 2.7 63.1 4.3 69.0 55.0 14.0 57.1 100
Inventories 52.0 3.2 50.5 6.2 59.0 43.5 15.5 54.8 103
Prices 63.3 8.3 59.8 13.9 80.5 41.3 39.2 56.1 106
Employment 50.8 3.7 51.7 7.1 59.9 43.9 16.0 43.1 98
Export Orders 48.5 4.5 54.8 8.3 64.0 44.5 19.5 20.5 89
Import Orders 50.0 4.0 54.7 7.4 63.5 45.5 18.0 25.0 91
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