Global| Aug 03 2005ISM Non-Manufacturing Index Down, As Expected
by:Tom Moeller
|in:Economy in Brief
Summary
The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month's improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a [...]
The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month's improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a decline to 61.
Since the series' inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.
A employment index reversed just a piece of the June improvement and fell to a still firm 56.2. Since the series' inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Moving the other way, the index of new orders jumped 2.4 points to 61.9, the highest level since March. Pricing power also surged. A 10.5 point gain m/m raised the index level to the highest level of this year (70.3).
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
| ISM Nonmanufacturing Survey | July | June | July '04 | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Business Activity Index | 60.5 | 62.2 | 63.4 | 62.4 | 58.2 | 55.1 |
| Prices Index | 70.3 | 59.8 | 72.4 | 69.0 | 56.8 | 54.0 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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