Global| Jul 06 2006ISM Nonmanufacturing Index Down
by:Tom Moeller
|in:Economy in Brief
Summary
The June Business Activity Index for the non-manufacturing sector about matched the three point May decline and fell to 57.0, reported the Institute for Supply Management (ISM). Consensus expectations for a lesser decline to 59.0. For [...]
The June Business Activity Index for the non-manufacturing sector about matched the three point May decline and fell to 57.0, reported the Institute for Supply Management (ISM). Consensus expectations for a lesser decline to 59.0.
For 2Q the index average nevertheless rose modestly to 60.0 from 59.1 during 1Q. It was the highest quarterly average in a year. Since the series' inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The new orders index fell three points to 56.6, the lowest level since February and the employment index dropped a large six points to 52.0, its lowest since January. 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.
Pricing power eased modestly and gave up half of the prior month's sharp increase. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
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 back to July 1997.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 | June | May | June '05 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Business Activity Index | 57.0 | 60.1 | 61.1 | 60.1 | 62.5 | 58.3 |
| Prices Index | 73.9 | 77.5 | 61.6 | 67.9 | 68.8 | 56.6 |
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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