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Economy in Brief
Kansas City Fed Manufacturing Index Dips in May But Remains Strong
The Kansas City Fed reported that its manufacturing sector business activity index declined to 23 in May...
U.S. Pending Home Sales Decline Sharply in April
Home buying remains under pressure...
U.S. Unemployment Claims Eased Slightly in the Latest Week
Initial claims for unemployment insurance filed in the week ended May 21 were 210,000 (-52.4% y/y)...
U.S. Durable Goods Orders Increase Modestly in April
Manufacturers' new orders for durable goods increased 0.4% during April (12.2% y/y)...
U.S. Mortgage Applications Continue to Weaken
The MBA Loan Applications Index fell 1.2% (-54.5% y/y) in the week ended May 20...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
State Coincident Indexes in April 2022
State Labor Markets in April 2022
Profits & Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation and Fed Policy: A Relationship which Should Worry the Fed and Scare Investors
by Tom Moeller March 5, 2012
Service sector activity continued to improve last month and was at its highest level since last February. The Composite Index for the service and construction sectors from the Institute for Supply Management (ISM) rose to 57.3 in February versus an unrevised 56.8 during January. The latest beat Consensus expectations for 56.5. Since the series' inception in 1997 there has been a 58% correlation between the level of the nonmanufacturing composite index and the q/q change in real GDP for the service and the construction sectors.
Haver Analytics calculates a composite index using this number and the ISM manufacturing sector index released on Thursday. The figure rose to 56.7, its highest in a year. During the last ten years there has been a 77% correlation between the figure and the quarterly change in real GDP.
The business activity component of the nonmanufacturing index again rose sharply to 62.6, its highest since February. The new orders series also rose m/m to 61.2 while the supplier delivery series fell to 49.5, indicating quicker delivery speeds and more economic slack. The employment series fell to 55.7. That retraced a small piece of the January rise which was to its highest since 2005. Since the series' inception in 1997 there has been an 87% 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.
The prices index rose sharply to 68.4 in February, its highest level since March. An improved 41% of respondents reported higher prices and just 4% reported them lower. Since inception ten years ago, there has been a 65% 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. The expectations figure from ACTION ECONOMICS is in the AS1REPNA database.
ISM Nonmanufacturing Survey | Feb | Jan | Dec | Feb'11 | 2011 | 2010 | 2009 |
---|---|---|---|---|---|---|---|
Composite Index | 57.3 | 56.8 | 53.0 | 59.0 | 54.5 | 54.1 | 46.3 |
Business Activity | 62.6 | 59.5 | 55.9 | 65.4 | 57.3 | 57.5 | 48.1 |
New Orders | 61.2 | 59.4 | 54.6 | 62.8 | 56.4 | 56.9 | 48.0 |
Employment | 55.7 | 57.4 | 49.8 | 55.8 | 52.4 | 49.7 | 40.0 |
Supplier Deliveries (NSA) | 49.5 | 51.0 | 51.5 | 52.0 | 51.9 | 52.2 | 49.0 |
Prices Index | 68.4 | 63.5 | 62.0 | 70.9 | 65.1 | 61.6 | 49.5 |