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Economy in Brief

U.S. ISM Nonmanufacturing Index Slips; Prices Rebound
by Peter D'Antonio  July 3, 2019

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) dipped to 55.1 in June after rising to 56.9 in May. The Action Economics Forecast Survey had expected a slight deterioration to 56.0. Today’s reading was the lowest in nearly two years and more than five points below the cycle high of 60.8 during September of last year. Nevertheless, nonmanufacturing ISM readings in the 55 range are still considered healthy.

Haver Analytics constructs a composite index combining the nonmanufacturing ISM index and the manufacturing ISM measure, which was released on Monday. This composite index dipped to 54.7 from 56.4 in May. That was the lowest composite index reading since October 2016.

Movement among the component series was mixed last month. The business activity measure declined to 58.2, its lowest level in three months, but remained broadly in line with its trend since 2016. The employment measure fell to 55.0, which was also near its trend. The new orders index fell to 55.8, the lowest reading since December 2017. Partially offsetting these declines was a rebound in the supplier delivery series to 51.5, up from a three-year low of 49.5.

The prices index picked up to 58.9, despite a decline in energy prices during the month. Twenty-seven percent of respondents reported higher prices, up from 21% the month before, while eight percent reported price declines.

Other important sub-series, which are NSA and not included in the overall index, posted healthy readings in the month. The backlog of orders index rebounded to 56.0 from 52.5 in May. The inventory change index increased for the third consecutive month to 55.0.

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) Jun May Apr Jun'18 2018 2017 2016
Composite Diffusion Index 55.1 56.9 55.5 58.7 58.9 57.0 54.9
   Business Activity 58.2 61.2 59.5 62.8 61.5 60.2 58.0
   New Orders 55.8 58.6 58.1 62.0 61.3 59.3 57.6
   Employment 55.0 58.1 53.7 54.4 56.9 55.1 52.5
   Supplier Deliveries (NSA) 51.5 49.5 50.5 55.5 55.8 53.2 51.5
Prices Index 58.9 55.4 55.7 61.6 62.1 57.6 52.6
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