Global| Feb 04 2015U.S. ISM Nonmanufacturing Index Moves Slightly Higher but Prices Fall Further
by:Tom Moeller
|in:Economy in Brief
Summary
The Institute for Supply Management (ISM) composite index of nonmanufacturing sector activity inched up to 56.7 during January from a revised 56.5 in December. Earlier data was revised due to new seasonal factors. The latest numbers [...]
The Institute for Supply Management (ISM) composite index of nonmanufacturing sector activity inched up to 56.7 during January from a revised 56.5 in December. Earlier data was revised due to new seasonal factors. The latest numbers remained well below the highs of the second half of 2014. 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 remained stable m/m at 56.3 but was the lowest reading since June. During the last ten years, there has been a 75% correlation between the index and the q/q change in real GDP.
Improvement last month in the composite index was paced by a rise in the measure of business activity to 61.5. That was, nevertheless, slightly below its earlier highs. The supplier deliveries measure also showed that delivery speeds had slowed. The new orders measure gained slightly m/m to 59.5, but it's been moving lower for six months. The employment index provided evidence that hiring weakened significantly. Its decline to 51.6 left it at the lowest level since last February. 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 prices paid series fell sharply to 45.5, the second month indicating declining prices. Fourteen percent of respondents paid higher prices, down from the 2011 high of 57%. Twenty percent paid lower prices, up from the June low of 3%.
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) | Jan | Dec | Nov | Jan'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 56.7 | 56.5 | 58.8 | 54.3 | 56.3 | 54.6 | 54.6 |
| Business Activity | 61.5 | 58.6 | 63.4 | 56.6 | 59.7 | 56.7 | 57.6 |
| New Orders | 59.5 | 59.2 | 61.0 | 52.2 | 58.6 | 55.8 | 56.5 |
| Employment | 51.6 | 55.7 | 56.3 | 56.0 | 54.9 | 54.3 | 53.5 |
| Supplier Deliveries (NSA) | 54.0 | 52.5 | 54.5 | 52.5 | 51.8 | 51.7 | 50.6 |
| Prices Index | 45.5 | 49.8 | 55.0 | 57.0 | 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.
More Economy in Brief
