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Economy in Brief

U.S. ISM Nonmanufacturing Index Improves
by Tom Moeller  September 6, 2017

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) rose to 55.3 during August from 53.9 in July. It remained near the lowest index level since August of last year. The Action Economics Forecast Survey expected 55.4. The ISM data are diffusion indexes where readings above 50 indicate expansion.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Friday. This composite rose to 55.7 in August from 54.2, both down from the recent high of 57.6 in February. During the last ten years, there has been a 73% correlation between this index and the q/q change in real GDP.

Movement amongst the component series was mixed last month. The business activity index rose to 57.5, but remained near a twelve month low. The new orders reading rose as well to 57.1, but remained fairly depressed. The supplier delivery index eased to 50.5, equaling the quickened delivery speed of February.

The employment measure improved to 56.2, the highest level in three months. During the last ten years, there has been an 89% correlation between the ISM nonmanufacturing sector jobs index and the m/m change in private service plus construction sector payrolls. A greatly lessened 25% (NSA) of industries reported a rising jobs level while a modestly higher 15% indicated a decline.

The prices paid index increased to 57.9, but stayed just below the recent high of 59.0 in January and up from the 2015 low of 48.7. A higher 20% (NSA) of firms reported paying higher prices while an increased seven percent of firms reported them lower.

Amongst the other detail indexes, which are not seasonally adjusted, export orders rose m/m to 55.0, but remained down sharply versus the 65.5 April high. The import index declined m/m to 50.5 and was steady y/y. The order backlog index rose m/m and remained up versus twelve months earlier.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Nonmanufacturing Survey (SA) Aug Jul Jun Aug'16 2016 2015 2014
Composite Diffusion Index 55.3 53.9 57.4 51.7 54.9 57.1 56.2
   Business Activity 57.5 55.9 60.8 52.4 58.0 60.8 59.6
   New Orders 57.1 55.1 60.5 52.0 57.5 59.2 58.5
   Employment 56.2 53.6 55.8 51.0 52.6 56.0 54.8
   Supplier Deliveries (NSA) 50.5 51.0 52.5 51.5 51.5 52.5 51.8
Prices Index 57.9 55.7 52.1 51.8 52.7 50.6 56.7
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