Recent Updates

  • Japan: ** Japan's consumption activity index rebased from 2010=100 to 2011=100.**
  • UAE: CPI (Mar), Dubai GDP (Q4); Lebanon: CPI (Mar); Israel: PMI (Mar), Quantity of New Dwellings Demanded (Feb)
  • Canada: Wholesale Trade (Feb)
  • US: Chicago Fed National Activity Index (Mar)
  • France: Loans (Feb), Foreign Currency Liquidity (Mar)
  • Spain: Industrial New Orders and Turnover, Service Sector, Construction Permits (Feb)
  • more updates...

Economy in Brief

U.S. ISM Nonmanufacturing Index Recovers For Second Month
by Tom Moeller   November 03, 2010

The U.S. service sector continued to improve last month. The October Composite Index for the service and construction sectors from the Institute for Supply Management (ISM) rose to 54.3 from 53.2 in September. The latest beat Consensus expectations for a reading of 54.0 and it remained up from a low of 37.2 late in 2008. Since the series' inception in 1997 there has been a 65% correlation between the level of the composite index in the nonmanufacturing sector and the q/q change in real GDP for the services and the construction sectors.

The performance of the components of the ISM Index was mostly positive last month. The business activity rose to 58.4 which was its highest level since June. Also higher was the new orders series which regained its July reading. Finally, the employment figure rose back to the July level. Thirteen percent (NSA) of respondents increased hiring while 18% reported fewer jobs. Since the series' inception in 1997 there has been an 80% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries. Weakest m/m was the supplier deliveries index which reversed its September rise as delivery speeds picked up.

The pricing power index rose sharply to its highest level since September 2008. One-third of respondents reported higher prices while 3% reported them lower. At the worst, late in 2008, 41% reported lower prices. Since its inception ten years ago, there has been a 71% correlation between the price index and the q/q change in the GDP services chain price index.

Beginning with the January 2008 Nonmanufacturing Report On Business ®, the composite index is calculated as an indication of overall economic conditions for the non-manufacturing sector. It is a composite index based on the diffusion indices of four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights.

The ISM data are available in Haver's USECON database.

Addressing the Impact of the Foreclosure Crisis from the Federal Reserve Bank of Chicago can be found here.

ISM Nonmanufacturing Survey Oct. Sept. Aug. Oct. '09 2009 2008 2007
Composite Index 54.3 53.2 51.5 50.1 46.2 47.3 53.5
    Business Activity 58.4 52.8 54.4 54.0 48.0 47.4 56.0
    New Orders 56.7 54.9 52.4 54.2 47.9 47.0 54.8
    Employment 50.9 50.2 48.2 41.7 39.9 43.8 52.0
    Supplier Deliveries (NSA) 51.0 55.0 51.0 50.5 49.0 51.1 51.1
Prices Index 68.3 60.1 60.3 53.4 49.4 66.0 63.8
close
large image