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Economy in Brief

U.S. ISM Nonmanufacturing Index Recovers as Activity and New Orders Firm
by Tom Moeller  May 5, 2015

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business improved to 57.8 during April from an unrevised 56.5 in March. The latest figure was the highest since November and exceeded expectations for 56.2 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Friday. It increased to 57.0, the highest level since November. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.

Improvement last month in the nonmanufacturing composite index reflected a sharp recovery in the business activity reading to 61.6, the highest point since November. The new orders series also rebounded to the highest level in three months. The employment index essentially marked time m/m, but it still was at the highest level in six months. 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 supplier delivery index declined, indicating the slowest delivery speeds this year.

The prices paid series reversed most of its March increase and indicated roughly stable prices. Fifteen percent (NSA) of respondents paid higher prices, though that still was down from the 2011 high of 57%. A roughly stable 10% 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.

Is Transition to Inflation Targeting Good for Growth? from the Federal Reserve Bank of San Francisco can be found here.

ISM Nonmanufacturing Survey (SA) Apr Mar Feb Apr'14 2014 2013 2012
Composite Diffusion Index 57.8 56.5 56.9 55.3 56.3 54.6 54.6
   Business Activity 61.6 57.5 59.4 60.3 59.7 56.7 57.6
   New Orders 59.2 57.8 56.7 58.3 58.6 55.8 56.5
   Employment 56.7 56.6 56.4 52.2 54.9 54.3 53.5
   Supplier Deliveries (NSA) 53.5 54.0 55.0 50.5 51.8 51.7 50.6
Prices Index 50.1 52.4 49.7 60.4 56.8 55.6 59.3
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