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Economy in Brief

U.S. ISM Nonmanufacturing Index Declines, Led by Orders
by Tom Moeller  October 5, 2015

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business fell to 56.9 during September from an unrevised 59.0 August. Despite the decline, the average during the third quarter of 58.7 was its highest since Q3 2005. Consensus expectations had been for 57.8 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Thursday. It fell to 56.1 from 58.0, leaving the Q3 average at its highest level in a year. During the last ten years, there has been a 73% correlation between the index and the q/q change in real GDP.

The decline in the composite index was led by a sharp drop in new orders 56.7, its lowest reading since February. The business activity reading also eased to 60.2, the lowest level in four months. The supplier deliveries index held steady m/m but the employment index improved to 58.3, pulling the quarterly average to a record high. During the last ten years, there has been a 96% correlation between the employment index and the m/m change in service plus construction payrolls.

The prices paid series declined to 48.4, the lowest level since February. Eleven percent (NSA) of respondents paid higher prices while 17 percent paid less.

The export order series (NSA) notched higher m/m but remained near an eight-month low. Imports jumped m/m, but remained down versus a 2004 high. The inventory series fell sharply m/m to a four-month low.

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

Macroprudential Policy in the U.S. Economy is the title of Friday's speech by Fed Vice Chairman Stanley Fischer and it can be found here.

ISM Nonmanufacturing Survey (SA) Sep Aug Jul Sep'14 2014 2013 2012
Composite Diffusion Index 56.9 59.0 60.3 58.1 56.3 54.6 54.6
   Business Activity 60.2 63.9 64.9 62.0 59.7 56.7 57.6
   New Orders 56.7 63.4 63.8 60.5 58.6 55.8 56.5
   Employment 58.3 56.0 59.6 57.8 54.9 54.3 53.5
   Supplier Deliveries (NSA) 52.5 52.5 53.0 52.0 51.8 51.7 50.6
Prices Index 48.4 50.8 53.7 55.2 56.8 55.6 59.3
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