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Economy in Brief

U.S. ISM Nonmanufacturing Index and Prices Improve
by Tom Moeller  April 5, 2016

The Composite Index of Nonmanufacturing Sector Business from the Institute for Supply Management (ISM) increased to 54.5 during March versus an unrevised 53.4 in February. It was the highest reading in three months. Consensus expectations had been for 54.1 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 Friday. It increased to 54.2, also the highest level in three months. For all of last quarter, the index fell to 53.3, the lowest level since Q4'11, from 55.9 in Q4'15. 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 business activity reading jumped to 59.8, its highest level since October. The new orders reading gained to 56.7 and the employment index rebounded to 50.3. 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 51.0, indicating a modest slow down in delivery speeds.

The prices paid series improved to 49.1, but remained below break-even for the third consecutive month. Fourteen percent (NSA) of respondents paid higher prices while 9 percent paid less.

The export order series (NSA) jumped to 58.5, a 12-month high. The imports series retreated to 53.0 and the order backlog figure remained at 52.0 for a third straight month, down from 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) Mar Feb Jan Mar'15 2015 2014 2013
Composite Diffusion Index 54.5 53.4 53.5 56.9 57.1 56.2 54.6
   Business Activity 59.8 57.8 53.9 59.0 60.8 59.7 56.6
   New Orders 56.7 55.5 56.5 58.3 59.2 58.6 55.8
   Employment 50.3 49.7 52.1 56.1 56.1 54.9 54.3
   Supplier Deliveries (NSA) 51.0 50.5 51.5 54.0 52.5 51.8 51.7
Prices Index 49.1 45.5 46.4 50.7 50.7 56.8 55.7
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