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Economy in Brief

ISM Non-manufacturing Index Down Unexpectedly
by Tom Moeller October 5, 2004

The September Business Activity Index for the non-manufacturing sector fell to 56.7 from 58.2 in August, reported the Institute for Supply Management. Consensus expectations had been for a moderate gain to 59.0.

Since the series' inception in 1997 there has been a 55% correlation between the Business Activity Index and the q/q change in GDP services plus construction.

The employment sub index continued to rise, adding 2.1 points to the 2.5 point gain in August. Since the series' inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.

The new orders index was about unchanged at 58.5 versus 58.6 in August.

The seasonally adjusted prices index fell to 67.1 versus 70.0 in August.

Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.

ISM Nonmanufacturing Survey Sep Aug Sep '03 2003 2002 2001
Business Activity Index 56.7 58.2 61.7 58.1 55.1 48.9
Prices Index 67.1 70.0 58.9 56.7 53.9 51.5
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