The non-manufacturing ISM surveys nearly 400 firms from 60 sectors across the United States, including agriculture, mining, construction, transportation, communications, wholesale trade and retail trade. Beginning with the January 2008 report, a new composite index was made public and is now the headline number. It is considered an indicator of the overall economic conditions for the non-manufacturing sector and consists of four equally weighted indexes: business activity, new orders, employment, and supplier deliveries. Why Investors Care
| Released on 5/5/08 For Apr 2008 | ||||||||||||
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Highlights
Growth in the U.S. economy remained minimal in April, according to the monthly purchasing surveys from the Institute For Supply Management. Today's report on the non-manufacturing sector showed a headline composite index of 52.0, up 2.4 points from March and above 50 to end three straight months in the 48 range. The business activity index, equivalent to a production index, slipped more than 1 point to 50.9. New orders slipped 1 tenth to 50.1 with backlogs up 2.5 points to the break-even 50 level. The break-even 50 level is the theme of the report, indicating no monthly change from March.
But prices are definitely changing -- and higher! Prices paid rose more than 1 point to 72.1 to indicate severe pressure. Supply chain readings showed a welcome dip in inventories to 47.0 but an odd increase in supplier deliveries, up 7 points to 56.0. The ISM report on the manufacturing side also showed an increase which is hard to explain given the lack of business. Perhaps extending deliveries are tied to efforts to raise prices.
One big positive in the report is a rise in the employment index, up nearly 4 points to 50.8 in a gain underscored strongly by survey chief Anthony Nieves who attibuted the rise to both business optimism on the outlook and the effect of prior job cuts which have pared payrolls perhaps too severely at many firms. The dollar got an immediate boost from the results while Treasury yields rose. The report is likely to give a boost to the stock market through the session. The ISM reports aren't signaling strength but more importantly they aren't signaling recession.
The business activity index from the ISM non-manufacturing survey in its most recent report for March indicated that the sector is flat rather than in recession. The ISM's composite index was little changed, up 3 tenths from February at 49.6 -- a nearly dead even 50 reading indicating an even split between those purchasers reporting contracting conditions and those reporting expanding conditions. New orders also improved to a break-even level of 50.2. As have been indicated by essentially all surveys, inflation is worsening as indicated by the prices paid index which was up nearly 3 points to 70.8.
Business activity index Consensus Forecast for April 08: 49.3
Range: 47.5 to 50.0
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Beginning with the January 2008 report, a new composite index was made public and is now the headline number. It is considered an indicator of the overall economic conditions for the non-manufacturing sector and consists of four equally weighted indexes: business activity, new orders, employment, and supplier deliveries. |
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