Global| Mar 04 2015U.S. ISM Nonmanufacturing Index Improves; Employment Strengthens
by:Tom Moeller
|in:Economy in Brief
Summary
The Institute for Supply Management (ISM) composite index of nonmanufacturing sector activity nudged higher to 56.9 during February from an unrevised 56.7 in January. Nevertheless, the latest numbers remained well below the highs of [...]
The Institute for Supply Management (ISM) composite index of nonmanufacturing sector activity nudged higher to 56.9 during February from an unrevised 56.7 in January. Nevertheless, the latest numbers remained well below the highs of the second half of 2014. West coast port congestion was indicated as constraining activity. The latest figure compared to 56.5 expected in the Action Economics Forecast Survey.
Haver Analytics constructs a composite index of the nonmanufacturing ISM index and the ISM factory sector measure, released Monday. It was roughly stable m/m at 56.4 but remained the lowest reading since June. During the last ten years, there has been a 74% correlation between the index and the q/q change in real GDP.
Improvement last month in the nonmanufacturing composite index reflected a gain in the employment reading to 56.4, its highest level since October. During the last ten years, there has been an 88% correlation between the employment index and the m/m change in service plus construction payrolls. The vendor deliveries index also rose sharply to 55.0. The reading indicated the slowest delivery speeds since September 2010. The new orders figure countered these improvements and fell sharply to 56.7, its weakest level since last March. The business activity measure also declined to 59.4 and reversed most of its January rise.
The prices paid series rose to 49.7. While that recovered virtually all of its January decline, it indicated declining prices, on balance, for the third straight month. Fifteen percent of respondents paid higher prices, down from the 2011 high of 57%. Eleven percent paid lower prices, up from the June low of 3%.
Improving the Oversight of Large Financial Institutions is yesterday's speech by Fed Chair Janet L. Yellen and is available here.
The ISM data are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Feb | Jan | Dec | Feb'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 56.9 | 56.7 | 56.5 | 52.5 | 56.3 | 54.6 | 54.6 |
| Business Activity | 59.4 | 61.5 | 58.6 | 55.7 | 59.7 | 56.7 | 57.6 |
| New Orders | 56.7 | 59.5 | 59.2 | 53.0 | 58.6 | 55.8 | 56.5 |
| Employment | 56.4 | 51.6 | 55.7 | 48.4 | 54.9 | 54.3 | 53.5 |
| Supplier Deliveries (NSA) | 55.0 | 54.0 | 52.5 | 53.0 | 51.8 | 51.7 | 50.6 |
| Prices Index | 49.7 | 45.5 | 49.8 | 56.0 | 56.8 | 55.6 | 59.3 |
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.
