Global| Apr 05 2017U.S. ISM Nonmanufacturing Index Declines; Pricing Power Eases
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) fell sharply to 55.2 in March from an unrevised 57.6 during February. It was the lowest level since October. The Action Economics [...]
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) fell sharply to 55.2 in March from an unrevised 57.6 during February. It was the lowest level since October. The Action Economics Forecast Survey expected a reading of 57.0. The ISM data are diffusion indexes where readings above 50 indicate expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure which was released Monday. This composite fell to 55.4 in March from 57.6 in February, and also was the lowest level since October. During the last ten years, there has been a 73% correlation between this index and the q/q change in real GDP.
Most of the nonmanufacturing index components declined last month. The business activity index retreated to 58.9 and reversed its February jump. The new orders reading similarly backpedaled to 58.9, reversing all of its February rise. The employment index fell to 51.6, its lowest level since August. During the last ten years there has been an 89% correlation between the ISM nonmanufacturing sector jobs index and the m/m change in private service plus construction sector payrolls. Working the other way last month was the supplier delivery index where delivery speeds slowed modestly as indicated by the index rise to 51.5.
The prices paid index declined to 53.5, the lowest level in six months. Twenty-one percent (NSA) of firms reported paying higher prices, up from 14% in March 2016. Nine percent of firms paid lower prices, the same as twelve months earlier.
Amongst the other detail indexes, which are not seasonally adjusted, export orders jumped m/m to 62.5, the highest level since May 2007. The import index also strengthened m/m to 56.5, up from 53.0 one year earlier. The order backlog index slightly y/y to 53.0 from 52.0.
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.
Did the Fiscal Stimulus Work? from the Federal Reserve Bank of Philadelphia is available here.
| ISM Nonmanufacturing Survey (SA) | Mar | Feb | Jan | Mar'16 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 55.2 | 57.6 | 56.5 | 54.9 | 54.9 | 57.1 | 56.2 |
| Business Activity | 58.9 | 63.6 | 60.3 | 59.7 | 58.0 | 60.8 | 59.6 |
| New Orders | 58.9 | 61.2 | 58.6 | 57.4 | 57.5 | 59.2 | 58.5 |
| Employment | 51.6 | 55.2 | 54.7 | 51.5 | 52.6 | 56.0 | 54.8 |
| Supplier Deliveries (NSA) | 51.5 | 50.5 | 52.5 | 51.0 | 51.5 | 52.5 | 51.8 |
| Prices Index | 53.5 | 57.7 | 59.0 | 50.0 | 52.7 | 50.6 | 56.7 |
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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