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Economy in Brief
U.S. Productivity Weakness Revised Little; Unit Labor Costs Still Firm
Productivity growth in the nonfarm business sector last quarter was revised to -0.2% at an annual rate (+1.5%) y/y...
U.S. Gasoline and Nat Gas Prices Fall While Crude Oil Prices Were Mixed
In the week ended December 9, retail gasoline prices edged down to $2.56 per gallon (+5.8% y/y)...
ZEW Assessments and Expectations Improve But Gain Less Markedly
The ZEW global macroeconomic assessments have improved along a broad front in December following a surge of improvement in November...
NABE Projections for Moderate Growth and Inflation Are Little Revised
The National Association for Business Economics expectations of 1.8% growth in real GDP during 2020...
German Trade Data Tell a Tale of Two Germanys
Germany's October trade report is better than expected...
by Sandy Batten May 3, 2019
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) slipped to 55.5 in April from 56.1 in March. This was the fourth monthly decline in the past five months but leaves the index still well above the critical 50 level that separates expansion from contraction. Nonetheless, this is the lowest reading for this index since July 2017 and well below the most recent 12-month average of 58.4. The Action Economics Forecast Survey expected an increase to 57.3.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM manufacturing measure, which was released on May 1. This composite also slipped in April—to 55.2 from 56.0 in March. This is the lowest reading on this constructed index since October 2016. Over the past 15 years, there has been a 71% correlation between this index and the quarter-on-quarter change in real GDP.
Of the nonmanufacturing index's four components, one rose and three fell in April. The business activity component index (a proxy for output) rose to 59.5 in April from 57.4, but failed to regain the ground it has lost in March. In contrast, the new orders, employment and supplier deliveries component index each fell in April. Orders slipped to 58.1 from 59.0. Employment declined to 53.7 from 55.9, its lowest reading since April 2017. And supplier deliveries decreased to 50.5 from 52.0.
The prices paid index eased to 55.7 from 58.7 and continues on a modest downtrend since late 2018. Twenty percent of firms (NSA) paid higher prices while only four percent of firms paid lower prices in April. Prices paid were unchanged for the remainder.
Among the other detail subindexes, which are not seasonally adjusted, the export order series strengthened m/m in April and has been recovering recently from a steep drop in January (likely related to tariff concerns). The import index jumped up to its highest reading since last September, while the order backlog index slipped to 55.0 from 56.6.
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) | Apr | Mar | Feb | Apr'18 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 55.5 | 56.1 | 59.7 | 57.2 | 58.9 | 57.0 | 54.9 |
| Business Activity | 59.5 | 57.4 | 64.7 | 59.5 | 61.5 | 60.2 | 58.0 |
| New Orders | 58.1 | 59.0 | 65.2 | 59.6 | 61.3 | 59.3 | 57.6 |
| Employment | 53.7 | 55.9 | 55.2 | 55.0 | 56.9 | 55.1 | 52.5 |
| Supplier Deliveries (NSA) | 50.5 | 52.0 | 53.5 | 54.5 | 55.8 | 53.2 | 51.5 |
| Prices Index | 55.7 | 58.7 | 54.4 | 62.0 | 62.1 | 57.6 | 52.6 |
