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Economy in Brief

U.S. ISM Nonmanufacturing Index Strengthens
by Tom Moeller  December 5, 2016

The Composite Index of Nonmanufacturing Sector Business Activity from the Institute for Supply Management (ISM) rebounded to 57.2 during November from an unrevised 54.8 in October. The latest level was the highest since October 2015, and compared to expectations for 55.5 in the Action Economics Forecast Survey. 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 that was released Thursday. This Composite increased to 56.7 from 54.5, and also was the highest level since October. During the last ten years, there has been a 73% correlation between this index and the q/q change in real GDP.

Performance amongst the nonmanufacturing components was mixed last month. The business activity index jumped to 61.7, the highest level since October. Employment improved to 58.2 and made up September's sharp decline to 53.1. 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 rose to 52.0, indicating the slowest order delivery speeds since June. The new orders series eased to 57.0 from 57.5.

The prices paid series fell to 56.3, but remained near the two-year high. Twelve percent (NSA) of respondents paid higher prices while seven percent paid less.

The export order series improved to 57.0, the highest level since March. The imports series also increased to 54.0, a five-month high. The order backlog measure declined 51.0 following two months at 52.0. Each of these last few readings is not seasonally adjusted.

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

The U.S. Economic Outlook and the Implications for Monetary Policy is the title of today's speech by N.Y. Fed President William C. Dudley, and it can be found here.

ISM Nonmanufacturing Survey (SA) Nov Oct Sep Nov'15 2015 2014 2013
Composite Diffusion Index 57.2 54.8 57.1 56.6 57.1 56.2 54.6
   Business Activity 61.7 57.7 60.3 59.4 60.8 59.7 56.6
   New Orders 57.0 57.7 60.0 57.9 59.2 58.6 55.8
   Employment 58.2 53.1 57.2 56.0 56.1 54.9 54.3
   Supplier Deliveries (NSA) 52.0 50.5 51.0 53.0 52.5 51.8 51.7
Prices Index 56.3 56.6 54.0 50.0 50.7 56.8 55.7
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