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 7/3/08 For Jun 2008 | ||||||||||||
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Highlights
Prices soared on the manufacturing side and are soaring as well on the non-manufacturing side as the Institute For Supply Management's prices paid index hit a record high 84.5 in June, up 7.5 points from May. There are now indications that these pressures are slowing growth, reflected in a sub-50 reading for the non-manufacturing composite headline index which fell to 48.2 vs. May's much better reading of 51.7. The business activity index, the report's former headline index that is the sum to a single question, also dipped below 50 to 49.9, down nearly 4 points to confirm the trouble.
Unfortunately weakness is centered in new orders, down nearly 5 points in the month to 48.6. New order readings have been below 50 before this year but there's something more ominous about this decline. Also ominous is the employment reading, down nearly 5 points to a record low 43.8. The employment report for June of course was released earlier this morning, showing labor market conditions to be on the edge of recession and this reading confirms the trouble.
Supply chain readings were steady showing that inventories aren't too heavy which is a plus given the slowdown underway. Otherwise, this report is filled with negatives. Treasury yields dipped as did the dollar in immediate reaction to the results.
The composite index from the ISM non-manufacturing survey is showing a flat economy just like its sister manufacturing index. The ISM's composite non-manufacturing index came in at 51.7 for May, falling 3 tenths from April. The business activity index, the former headline index that is now one of four components making up the composite index, showed a little more strength, at 53.6 for a nearly 3 point gain, putting it moderately in positive territory. New orders also nudged up further past the break-even point, rising 3.5 points to 53.6. The big negative as it is in all business surveys is inflation. Prices paid jumped from 72.1 in April to 77.0 in May.
Composite index Consensus Forecast for June 08: 51.0
Range: 48.5 to 52.0
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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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