Recent Updates

  • China: GDP (Q1)
  • Euro area: CSPP Holdings Detail (Q1)
  • US: Consumer Sentiment (Apr-prelim), New Residential Constr (Mar)
  • Hong Kong: Personal Bankruptcy Petitions, Clearing
  • more updates...

Economy in Brief

U.S. ISM Nonmanufacturing Index Improves; Employment Strengthens
by Tom Moeller  March 4, 2015

The Institute for Supply Management (ISM) composite index of nonmanufacturing sector activity nudged higher to 56.9 during February from an unrevised 56.7 in January. Nevertheless, the latest numbers remained well below the highs of the second half of 2014. West coast port congestion was indicated as constraining activity. The latest figure compared to 56.5 expected in the Action Economics Forecast Survey.

Haver Analytics constructs a composite index of the nonmanufacturing ISM index and the ISM factory sector measure, released Monday. It was roughly stable m/m at 56.4 but remained the lowest reading since June. During the last ten years, there has been a 74% correlation between the index and the q/q change in real GDP.

Improvement last month in the nonmanufacturing composite index reflected a gain in the employment reading to 56.4, its highest level since October. During the last ten years, there has been an 88% correlation between the employment index and the m/m change in service plus construction payrolls. The vendor deliveries index also rose sharply to 55.0. The reading indicated the slowest delivery speeds since September 2010. The new orders figure countered these improvements and fell sharply to 56.7, its weakest level since last March. The business activity measure also declined to 59.4 and reversed most of its January rise.

The prices paid series rose to 49.7. While that recovered virtually all of its January decline, it indicated declining prices, on balance, for the third straight month. Fifteen percent of respondents paid higher prices, down from the 2011 high of 57%. Eleven percent paid lower prices, up from the June low of 3%.

Improving the Oversight of Large Financial Institutions is yesterday's speech by Fed Chair Janet L. Yellen and is available here.

The ISM data are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Nonmanufacturing Survey (SA) Feb Jan Dec Feb'14 2014 2013 2012
Composite Diffusion Index 56.9 56.7 56.5 52.5 56.3 54.6 54.6
   Business Activity 59.4 61.5 58.6 55.7 59.7 56.7 57.6
   New Orders 56.7 59.5 59.2 53.0 58.6 55.8 56.5
   Employment 56.4 51.6 55.7 48.4 54.9 54.3 53.5
   Supplier Deliveries (NSA) 55.0 54.0 52.5 53.0 51.8 51.7 50.6
Prices Index 49.7 45.5 49.8 56.0 56.8 55.6 59.3
large image