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Economy in Brief

U.S. ISM Nonmanufacturing Index Slips
by Tom Moeller  April 6, 2015

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Activity fell to 56.5 during March from an unrevised 56.9 in February. These numbers remained well below the highs of the second half of 2014. The latest figure matched expectations in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Wednesday. It fell to 55.9, the lowest level since last April. During the last ten years, there has been a 74% correlation between the index and the q/q change in real GDP.

The slip last month in the nonmanufacturing composite index reflected a sharp decline in the business activity reading to 57.5, the lowest point in twelve months. The supplier delivery (54.0) index also reversed its February gain, but the recent upward trend in the index indicates slowing delivery speeds. The new orders reading (57.8) recovered some of the prior month's decline while the employment index notched slightly higher to 56.6, 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 prices paid series rose to 52.4, indicating rising prices, on balance, for the first time since November. A higher 21% of respondents paid higher prices, though that still was down from the 2011 high of 57%. A lessened 9% paid lower prices, the least in six months.

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) Mar Feb Jan Mar'14 2014 2013 2012
Composite Diffusion Index 56.5 56.9 56.7 53.7 56.3 54.6 54.6
   Business Activity 57.5 59.4 61.5 54.2 59.7 56.7 57.6
   New Orders 57.8 56.7 59.5 54.8 58.6 55.8 56.5
   Employment 56.6 56.4 51.6 53.7 54.9 54.3 53.5
   Supplier Deliveries (NSA) 54.0 55.0 54.0 52.0 51.8 51.7 50.6
Prices Index 52.4 49.7 45.5 58.1 56.8 55.6 59.3
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