U.S. ISM Services PMI Declines in February
by:Tom Moeller
|in:Economy in Brief
Summary
- Employment & supplier deliveries indexes weaken.
- Business activity & new orders improve.
- Prices Index falls sharply.
The U.S. ISM Services PMI fell to 52.6 during February from 53.4 in January, according the Institute for Supply Management. The figure indicated expansion for the 14th consecutive month, but stood below its high of 67.1 in November 2021. An index level of 53.0 had been expected in the Action Economics Forecast Survey for February. A reading above 50 indicates expansion in the service sector.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading which was released on Friday. This index fell to 52.0 in February after rising to 52.9 in January. The index remained below the record 66.3 in November 2021. The series dates back to July 1997.
In the latest services survey, the employment index fell to 48.0 after surging to 50.5 in January. A lessened 13.5% (NSA) of respondents reported more hiring while a steady 20.6% reported lower. The supplier delivery series weakened to 48.9 from 52.4. It was the lowest level in four months. Seven percent (NSA) of respondents reported faster delivery speeds while 5.0% percent reported slower speeds.
The business activity index increased to 57.2 last month from 55.8 in January. Twenty-four percent of respondents reported improved activity while 9.1% reported it lower. The new orders index improved to 56.1 from 55.0 and was the strongest reading in six months. Twenty-five percent (NSA) of respondents reported stronger new orders while 7.4% reported less.
The prices index (which is not part of the aggregate series) declined to 58.6 in February from 64.0 in January, the highest level since February of last year. Twenty-three percent of respondents reported higher prices while 5.3% reported them lower.
In other series, not contained in the overall index, the export orders index fell sharply to 51.6 (NSA) from 56.1 in January. The figure was down from a high of 63.7 last September. The imports series fell to 54.3 from 59.9 in January. The order backlog series eased slightly to 50.3 from 51.4, which was a six-month high.
The ISM Services PMI is a composite index consisting four equally weighted diffusion indexes (25% each): Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector; below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver’s USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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