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Economy in Brief

U.S. ISM Nonmanufacturing Index Strengthens; Prices Jump
by Tom Moeller  May 4, 2016

The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) increased to 55.7 during April versus an unrevised 54.5 in March. It was the highest reading since December. Consensus expectations had been for 54.7 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where a reading above 50 indicates expansion.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Monday. It increased to 55.1, the highest level since November. 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, the new orders reading jumped to 59.9, its highest level in six months. The employment index also strengthened to 53.0, the highest level this year. 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 index remained unchanged at 51.0, but the business activity measure declined to 58.8. That reversed half of the prior month's gain.

The prices paid series jumped to 53.4, the highest level since last May. Nineteen percent (NSA) of respondents paid higher prices while 7 percent paid less.

The export order series (NSA) eased to 56.5, but remained near the one-year high. The imports series rose slightly to 54.0, and the order backlog figure eased to 51.5. The figure has been roughly stable for four months, but remained down versus a high of 56.5 last August.

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

ISM Nonmanufacturing Survey (SA) Apr Mar Feb Apr'15 2015 2014 2013
Composite Diffusion Index 55.7 54.5 53.4 57.5 57.1 56.2 54.6
   Business Activity 58.8 59.8 57.8 61.3 60.8 59.7 56.6
   New Orders 59.9 56.7 55.5 59.0 59.2 58.6 55.8
   Employment 53.0 50.3 49.7 56.2 56.1 54.9 54.3
   Supplier Deliveries (NSA) 51.0 51.0 50.5 53.5 52.5 51.8 51.7
Prices Index 53.4 49.1 45.5 50.1 50.7 56.8 55.7
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