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Economy in Brief

U.S. ISM Nonmanufacturing Index Jumps to 10-Year High
by Tom Moeller  August 5, 2015

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business increased to 60.3 during July from an unrevised 56.0 in June. It was the highest level since August 2005 and surpassed 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 Monday. It increased to 59.4, also the highest level since August 2005. During the last ten years, there has been a 73% correlation between the index and the q/q change in real GDP.

Each of the component series improved significantly last month. The business activity reading jumped to 64.9, the highest level since January 2004. The new orders reading improved 5.5 points to 63.8. The employment index jumped to 59.6, a ten-year high. 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 rose to 53.0 and indicated the slowest delivery speeds in three months.

The prices paid series gained modestly to 53.7, remaining above the break-even level of 50 for the fifth straight month. Fourteen percent (NSA) of respondents paid higher prices while 10 percent paid less.

The export order series (NSA) rose to its highest point since March and improved moderately y/y. Imports rose modestly m/m but were down versus July 2004. The inventory series jumped sharply m/m and was well above the year-ago level.

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) Jul Jun May Jul'14 2014 2013 2012
Composite Diffusion Index 60.3 56.0 55.7 57.9 56.3 54.6 54.6
   Business Activity 64.9 61.5 59.5 61.3 59.7 56.7 57.6
   New Orders 63.8 58.3 57.9 62.6 58.6 55.8 56.5
   Employment 59.6 52.7 55.3 56.1 54.9 54.3 53.5
   Supplier Deliveries (NSA) 53.0 51.5 50.0 51.5 51.8 51.7 50.6
Prices Index 53.7 53.0 55.9 60.0 56.8 55.6 59.3
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