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Economy in Brief

U.S. ISM Nonmanufacturing Index Improvement Led by New Orders
by Tom Moeller  November 4, 2015

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business recovered to 59.1 during October after an unrevised September decline to 56.9. Consensus expectations had been for 56.5 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure, released Monday. It rose to 58.0 and also recovered its decline in the prior month. During the last ten years, there has been a 73% correlation between the index and the q/q change in real GDP.

The increase in the composite index was led by a sharp recovery to 62.0 in new orders. The business activity reading also gained to 63.0 and made up most of its September decline. The employment index rose moderately to 59.2 and nearly matched its expansion high. 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 supplier delivery series eased and indicated the quickest delivery speeds since June. The latest reading of 52.0 was off sharply from a high of 55.0 in February.

The prices paid series improved slightly to 49.1 but remained below the break-even level of 50 for a second month. Ten percent (NSA) of respondents paid higher prices while 16 percent paid less.

The export order series (NSA) notched higher m/m but remained near an eight-month low. Imports jumped m/m, but remained down versus a 2004 high. The inventory series fell sharply m/m to a four-month low.

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) Oct Sep Aug Oct'14 2014 2013 2012
Composite Diffusion Index 59.1 56.9 59.0 56.9 56.3 54.6 54.6
   Business Activity 63.0 60.2 63.9 60.5 59.7 56.7 57.6
   New Orders 62.0 56.7 63.4 59.3 58.6 55.8 56.5
   Employment 59.2 58.3 56.0 58.3 54.9 54.3 53.5
   Supplier Deliveries (NSA) 52.0 52.5 52.5 49.5 51.8 51.7 50.6
Prices Index 49.1 48.4 50.8 52.8 56.8 55.6 59.3
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