Global| Jan 06 2016U.S. ISM Nonmanufacturing Index Eases Further; Prices Fall
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Business, from the Institute for Supply Management (ISM), declined to 55.3 last month and added to an unrevised November decline to 55.9. It was the lowest level since April 2014. [...]
The Composite Index of Nonmanufacturing Sector Business, from the Institute for Supply Management (ISM), declined to 55.3 last month and added to an unrevised November decline to 55.9. It was the lowest level since April 2014. Consensus expectations had been for 56.0 in the Action Economics Forecast Survey. Despite the decline, for all of last year the ISM index averaged 57.2, the highest level in ten years. ISM data are diffusion indexes where a reading above 50 indicates expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Monday. It eased to 54.4, the lowest level since March 2014. During the last ten years, there has been a 73% correlation between the index and the q/q change in real GDP.
The decline in the nonmanufacturing index was due to a sharp drop in the supplier deliveries reading to 48.5, suggesting the fastest delivery speeds in three years. Amongst the other component series, small increases were logged. The business activity reading gained to 58.7, but remained below the July high of 64.9. Similarly, the employment index rose to 55.7, still well below its July high of 59.6. 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 improved modestly to 58.2.
The prices paid series fell below break-even to 49.7, the third month in the last four suggesting declining prices. Eight percent (NSA) of respondents paid higher prices while 14 percent paid less.
The export order series (NSA) recovered most of its November decline with a rise to 53.5 while imports declined to the lowest level in six months. The inventory series declined slightly following two months of increase.
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Dec | Nov | Oct | Dec'14 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 55.3 | 55.9 | 59.1 | 56.5 | 57.2 | 56.3 | 54.6 |
| Business Activity | 58.7 | 58.2 | 63.0 | 58.6 | 60.8 | 59.7 | 56.7 |
| New Orders | 58.2 | 57.5 | 62.0 | 59.2 | 59.3 | 58.6 | 55.8 |
| Employment | 55.7 | 55.0 | 59.2 | 55.7 | 56.1 | 54.9 | 54.3 |
| Supplier Deliveries (NSA) | 48.5 | 53.0 | 52.0 | 52.5 | 52.5 | 51.8 | 51.7 |
| Prices Index | 49.7 | 50.3 | 49.1 | 49.8 | 50.7 | 56.8 | 55.6 |
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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