Global| Jun 05 2017U.S. ISM Nonmanufacturing Index Weakens
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) fell to 56.9 during May, and reversed all of its April increase. The Action Economics Forecast Survey expected a reading of 56.0. [...]
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) fell to 56.9 during May, and reversed all of its April increase. The Action Economics Forecast Survey expected a reading of 56.0. 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 which was released last Thursday. This composite declined to 56.7 in May, after rising to 57.2 in April. The index increased from 53.3 last May. During the last ten years, there has been a 73% correlation between this index and the q/q change in real GDP.
Most of the nonmanufacturing index component series declined last month. The new orders reading fell sharply to 57.7 following its April jump to a recovery high 63.2. The business activity index fell to 60.7 and reversed half of its April rise. The supplier delivery index fell to 51.5 and reversed all of its April gain.
The employment measure rose to 57.8, its highest level since July 2015. During the last ten years there has been an 89% correlation between the ISM nonmanufacturing sector jobs index and the m/m change in private service plus construction sector payrolls. Thirty percent (NSA) of industries reported a rising jobs level while 12% indicated a decline.
The prices paid index deteriorated to 49.2. It was the first indication of falling prices since February of last year. Seventeen percent (NSA) of firms reported paying higher prices while eleven percent of firms paid reported them lower.
Amongst the other detail indexes, which are not seasonally adjusted, export orders plunged m/m to 54.5. It reversed most of the prior three months' increase, but remained up y/y. The import index similarly fell sharply to 48.5, down from 53.5 one year earlier. The order backlog index rose to 57.0 from 50.0 twelve months earlier.
The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | May | Apr | Mar | May'16 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 56.9 | 57.5 | 55.2 | 53.6 | 54.9 | 57.1 | 56.2 |
| Business Activity | 60.7 | 62.4 | 58.9 | 56.0 | 58.0 | 60.8 | 59.6 |
| New Orders | 57.7 | 63.2 | 58.9 | 54.8 | 57.5 | 59.2 | 58.5 |
| Employment | 57.8 | 51.4 | 51.6 | 50.9 | 52.6 | 56.0 | 54.8 |
| Supplier Deliveries (NSA) | 51.5 | 53.0 | 51.5 | 52.5 | 51.5 | 52.5 | 51.8 |
| Prices Index | 49.2 | 57.6 | 53.5 | 54.7 | 52.7 | 50.6 | 56.7 |
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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