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Economy in Brief

U.S. ISM Nonmanufacturing Index Rebounds; Prices Ease
by Tom Moeller  June 5, 2019

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) increased to 56.9 during May after falling to 55.5 in April. The Action Economics Forecast Survey expected stability at 55.5. Despite the gain, the index remained below the high of 60.8 during September of last year. It also remained below last year's average level of 58.9.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM manufacturing measure, which was released on Monday. This composite improved to 56.4 from 55.2 in April. So far this year, the index has averaged 56.7 versus 58.9 last year. Over the past 15 years, there has been a 71% correlation between this index and the Q/Q change in real GDP.

Movement amongst the component series was mixed last month. The business activity measure rose to 61.2, its highest level in three months, but remained below the Q4'18 high of 62.7. The new orders index rose to 58.6, but also remained lower than the Q4 high of 62.4. The employment measure rose to 58.1, its highest level since October. Two-thirds of industries reported increased hiring. Offsetting these gains was a sharp decline in the supplier delivery series to 49.5, indicating the quickest delivery speeds since December 2015.

The prices index declined to 55.4. The index reached a peak of 64.3 in October. Twenty-one percent of respondents reported higher prices, down from the high of 41% twelve months earlier, while three percent reported a price decline.

In other sub-series which are NSA, the export orders index eased to 55.5, down from a high of 61.5 last April. The order backlog measure slipped to 52.5 from 60.5 last May.

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) May Apr Mar May'18 2018 2017 2016
Composite Diffusion Index 56.9 55.5 56.1 58.9 58.9 57.0 54.9
   Business Activity 61.2 59.5 57.4 61.2 61.5 60.2 58.0
   New Orders 58.6 58.1 59.0 60.6 61.3 59.3 57.6
   Employment 58.1 53.7 55.9 55.2 56.9 55.1 52.5
   Supplier Deliveries (NSA) 49.5 50.5 52.0 58.5 55.8 53.2 51.5
Prices Index 55.4 55.7 58.7 63.7 62.1 57.6 52.6
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