Global| Jul 06 2016U.S. ISM Nonmanufacturing Index Unexpectedly Jumps to Seven-Month High
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) strengthened to 56.5 during June versus an unrevised 52.9 in May. It was the highest level since November. Consensus [...]
The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) strengthened to 56.5 during June versus an unrevised 52.9 in May. It was the highest level since November. Consensus expectations had been for a decline to 53.5 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where readings above 50 indicate expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Friday. It surged to 56.1, the highest level since October. 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 there was broad-based strength last month. The business activity reading rebounded to 59.5, the highest in six months, while new orders recovered their May drop. The supplier delivery series jumped to 54.0 and indicated the slowest product delivery speeds since March of last year. The employment index recovered most of May's decline and moved above break-even to 52.7. 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 prices paid series remained fairly stable at 55.5, near the highest level since September 2014. Twenty percent (NSA) of respondents paid higher prices while five percent paid less.
The export order series rebounded to 53.0, but remained well below last July's high. The imports price series was stable at 54.0. The order backlog figure dropped sharply to 47.5, the lowest level since December 2013. Each of these last few readings is not seasonally adjusted
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Jun | May | Apr | Jun'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 56.5 | 52.9 | 55.7 | 56.2 | 57.1 | 56.2 | 54.6 |
| Business Activity | 59.5 | 55.1 | 58.8 | 61.5 | 60.8 | 59.7 | 56.6 |
| New Orders | 59.9 | 54.2 | 59.9 | 58.7 | 59.2 | 58.6 | 55.8 |
| Employment | 52.7 | 49.7 | 53.0 | 53.1 | 56.1 | 54.9 | 54.3 |
| Supplier Deliveries (NSA) | 54.0 | 52.5 | 51.0 | 51.5 | 52.5 | 51.8 | 51.7 |
| Prices Index | 55.5 | 55.6 | 53.4 | 52.3 | 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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