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Economy in Brief

U.S. ISM Nonmanufacturing Index Strengthens to 12-Month High
by Tom Moeller  March 4, 2020

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) increased to 57.3 during February from 55.5 in January. It was the highest level since February 2019. A reading of 55.0 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 on Monday. The figure rose to 56.5 from 55.0 in January. It also was the highest level in twelve months. During the last 15 years, there has been a 69% correlation between this index and the q/q change in real GDP.

The rise in the nonmanufacturing index reflected a surge in the new orders measure to 63.1 from 56.2. It was improved from a low of 54.7 last September. The employment index also rose to 55.6, up from 51.7 in September. Also rising was the supplier delivery index, although on balance it has been moving sideways recently. Working the other way was the business activity index, which fell sharply to 57.8. It nevertheless remained up from the November low.

Also moving sharply lower was the prices index to 50.8 from 55.5. It was the lowest level since May 2017. A greatly lessened eleven percent of respondents reported higher prices while an increased nine percent reported lower prices.

Amongst other series in the nonmanufacturing survey, the export reading surged to its highest level (NSA) since April of last year. The order backlog figure also jumped, but imports fell sharply after recent gains.

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) Feb Jan Dec Feb'19 2019 2018 2017
Composite Diffusion Index 57.3 55.5 54.9 58.5 55.5 58.9 56.9
   Business Activity 57.8 60.9 57.0 62.9 58.0 61.5 60.2
   New Orders 63.1 56.2 55.3 62.0 57.5 61.4 59.3
   Employment 55.6 53.1 54.8 55.6 54.9 56.9 55.1
   Supplier Deliveries (NSA) 52.4 51.7 52.5 53.5 51.5 55.8 53.2
Prices Index 50.8 55.5 59.3 54.3 57.6 62.1 57.6
ISM Manufacturing and Nonmanufacturing Composite 56.5 55.0 54.1 58.0 55.0 58.9 57.0
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