Global| Feb 03 2016U.S. ISM Nonmanufacturing Index Declines Sharply, Nearing 2014 Low
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Business from the Institute for Supply Management (ISM) declined to 53.5 during January from an upwardly revised 55.8 in December. It was the lowest level since February 2014. Consensus [...]
The Composite Index of Nonmanufacturing Sector Business from the Institute for Supply Management (ISM) declined to 53.5 during January from an upwardly revised 55.8 in December. It was the lowest level since February 2014. Consensus expectations had been for 55.3 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where a reading above 50 indicates expansion. Data back to 2014 were revised.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Monday. It fell to 52.9, also the lowest level since February 2014. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.
The decline in the nonmanufacturing index was broad-based. The business activity series weakened to 53.9, the lowest level since August 2012. The employment index declined to 52.1, indicating the weakest job growth in twelve months. During the last ten years, there has been a 96% correlation between the employment index and the m/m change in service plus construction payrolls. The new orders index also fell to 56.5, a four month low. Moving to the upside was the supplier delivery index to 51.5. That indicated slower delivery speeds and reversed most of the prior December decline.
The prices paid series fell below break-even to 46.4 from 51.0, revised from 49.7. Twelve percent (NSA) of respondents paid higher prices while 19 percent paid less.
The export order series (NSA) dropped sharply to 45.5. It represented the greatest decline in export volumes since March 2009. The imports series also collapsed showing the largest decline since July 2012. The order backlog measure rose slightly.
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Jan | Dec | Nov | Jan'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 53.5 | 55.8 | 56.6 | 56.9 | 57.1 | 56.2 | 54.6 |
| Business Activity | 53.9 | 59.5 | 59.4 | 61.3 | 60.8 | 59.7 | 56.6 |
| New Orders | 56.5 | 58.9 | 57.9 | 60.0 | 59.2 | 58.6 | 55.8 |
| Employment | 52.1 | 56.3 | 56.0 | 52.1 | 56.1 | 54.9 | 54.3 |
| Supplier Deliveries (NSA) | 51.5 | 48.5 | 53.0 | 54.0 | 52.5 | 51.8 | 51.7 |
| Prices Index | 46.4 | 51.0 | 50.0 | 46.5 | 50.7 | 56.8 | 55.7 |
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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