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Economy in Brief

U.S. ISM Nonmanufacturing Index Improves to Four-Month High
by Tom Moeller  January 7, 2020

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) increased to 55.0 during December from 53.9 in November. It was the highest level since August but remained below the high of 60.8 in September 2018. Despite the latest gain, the index for all of last year fell to 55.5, the weakest reading since 2016. A December index of 54.5 had been expected in the Action Economics Forecast Survey. Readings above 50 indicate a rise in activity.

Haver constructs a Composite Index using this nonmanufacturing reading and the manufacturing series released last Friday. The figure rose to 54.1 from 53.2 in November. It also was the highest level since August. During the last 15 years, there has been a 70% correlation between this index and the q/q change in real GDP.

The rise in the nonmanufacturing index reflected a gain in the Business Activity measure to 57.2 which recouped the prior month's decline. The Supplier Delivery index improved to 52.5. This reading was down sharply from last year, indicating faster delivery speeds. Working lower was the new orders measure to 54.9, the lowest figure in three months. Also easing was the Employment index to 55.2, though it remained up from a low of 50.4 three months earlier.

The Prices index rose to 59.5 from 58.5. It has been moving sideways since the end of last year. Sixteen percent of respondents reported paying higher prices while five percent paid less.

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) Dec Nov Oct Dec'18 2019 2018 2017
Composite Diffusion Index 55.0 53.9 54.7 58.0 55.5 58.9 57.0
   Business Activity 57.2 51.6 57.0 61.2 58.0 61.5 60.2
   New Orders 54.9 57.1 55.6 62.7 57.5 61.3 59.3
   Employment 55.2 55.5 53.7 56.6 55.0 56.9 55.1
   Supplier Deliveries (NSA) 52.5 51.5 52.5 51.5 51.5 55.8 53.2
Prices Index 59.5 58.5 56.6 58.0 57.6 62.1 57.6
ISM Manufacturing + Nonmanufacturing Composite (SA) 54.1 53.2 54.0 57.6 55.0 58.9 57.0
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