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 6/4/08 For May 2008 | ||||||||||||
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Highlights
The ISM's composite non-manufacturing index came in at 51.7 for May, down 3 tenths from April but gratefully solid enough given economic uncertainty. The business activity index, the former headline index that is now one of four components making up the composite index, is showing more strength, at 53.6 for a nearly 3 point gain that indicates rising output for the sample (the business activity index is equivalent to a production index). New orders are a special positive, up 3.5 points to 53.6 and a reading that will boost confidence for future business development.
But the employment index right now is a negative, down more than 2 points to 48.7 in a drop that points to trouble for Friday's payroll report. Inventories, which are lean in any case, increased perhaps in anticipation of rising output in the months ahead.
The big negative as it is in all business surveys is inflation. Prices paid jumped to 77.0 from 72.1, elevated levels pointing to compressed profit margins and limited wage increases. The results had no significant impact on trading though they point to improved rates of growth during the second half.
The composite index from the ISM non-manufacturing survey improved in April but remained essentially flat. The headline composite index rose 2.4 points from March to 52.0, ending three straight months in the 48 range. The business activity index, equivalent to a production index, slipped more than 1 point to 50.9. There is not much good news looking ahead as new orders slipped 1 tenth to 50.1, indicating no change. But prices continue upward with prices paid rising more than 1 point to 72.1 to indicate severe pressure. The good news is that the ISM non-manufacturing index is not signaling recession. The bad news is that no growth is being paired up with rising inflation pressures.
Composite index Consensus Forecast for May 08: 51.0
Range: 49.0 to 52.5
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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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