The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business eased to 59.0 during August from an unrevised 60.3 in July. These figures are the highest since the middle of 2005. Consensus expectations had been for 58.2 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Tuesday. It also dipped to 58.0, but remained near the highest level since August 2005. During the last ten years, there has been a 73% correlation between the index and the q/q change in real GDP.

Each of the component series declined moderately last month. The business activity reading eased to 63.9, still nearly the highest level since January 2004. The new orders reading slipped to 63.4. The employment index fell to 56.0 from its July high. 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 supplier delivery index eased to 52.5 and indicated slightly faster delivery speeds.

The prices paid series declined to 52.5, remaining above the break-even level of 50 for the sixth straight month. Eleven percent (NSA) of respondents paid higher prices while 12 percent paid less.

The export order series (NSA) declined moderately as imports rose, but remained down versus July 2004. The inventory series eased m/m but still indicated a firm rate of accumulation.

The ISM data are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.