Global| Jun 03 2016U.S. ISM Nonmanufacturing Index Declines Unexpectedly; Prices Firm
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) declined to 52.9 during May versus an unrevised 55.7 in April. It was the lowest level since February 2014. Consensus [...]
The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) declined to 52.9 during May versus an unrevised 55.7 in April. It was the lowest level since February 2014. Consensus expectations had been for a rise to 55.3 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where readings above 50 indicates expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Wednesday. It fell to 52.7, the lowest level since August 2012. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.
Amongst the component series, the business activity reading fell to 55.1, the lowest reading since January. New orders dropped sharply to 54.2. The employment index fell below break-even to 49.7 following two months above 50. 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 supplier delivery index increased to 52.5.
The prices paid series increased to 55.6, the highest level since September 2014. Twenty four percent (NSA) of respondents paid higher prices while 7 percent paid less.
The export order series (NSA) fell to 49.0 and the imports series eased to 53.5. The order backlog figure fell to 50.0 and remained down versus a high of 56.5 last August.
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | May | Apr | Mar | May'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 52.9 | 55.7 | 54.5 | 55.9 | 57.1 | 56.2 | 54.6 |
| Business Activity | 55.1 | 58.8 | 59.8 | 59.9 | 60.8 | 59.7 | 56.6 |
| New Orders | 54.2 | 59.9 | 56.7 | 58.0 | 59.2 | 58.6 | 55.8 |
| Employment | 49.7 | 53.0 | 50.3 | 55.8 | 56.1 | 54.9 | 54.3 |
| Supplier Deliveries (NSA) | 52.5 | 51.0 | 51.0 | 50.0 | 52.5 | 51.8 | 51.7 |
| Prices Index | 55.6 | 53.4 | 49.1 | 54.0 | 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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