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 9/4/08 For Aug 2008 | ||||||||||||
| ||||||||||||
Highlights
The non-manufacturing sector held steady and soft in August, the results of today's ISM report that shows a mild 1.1 point improvement in the composite headline index to 50.6. Key readings show little change and continue to hover near 50, a breakeven level that indicates no month-to-month change. New orders are the best news in the report, rising nearly 2 points but still under 50 at 49.7 to indicate that slightly more respondents reported a month-to-month decline than increase. Employment is the worst news in the report, down 1.7 points to 45.4 to indicate deepening contraction and pointing to trouble for tomorrow's employment report.
The business activity index, equivalent to a production index, rose more than 2 points to 50.6 and confirms similar strength in the ISM production index in Tuesday's manufacturing report. But increased production isn't helping employment. Inventories continue to accumulate but at a slightly slower pace, at 53.5 for a 1 point decline from July. The ISM's inventory data on the manufacturing side showed wide increases, but inventories on the non-manufacturing side are smaller in size and are more subject to immediate demand pull. Backlogs and exports are also less significant on the non-manufacturing side, helping to take the sting out of declines in today's report.
Prices paid also declined, down nearly 8 points in what will hopefully develop into a trend given the ongoing decline in oil prices. But the dip in employment and still sub-50 reading for new orders are negatives that offset the gain in business activity. There was no significant reaction to the report.
The composite index from the ISM non-manufacturing survey showed less weakness in July. The headline composite index rose 1.3 points to 49.5, boosted by easing weakness in employment and an odd extension in delivery time. But orders point to slippage ahead. The new orders index fell nearly 1 point to 47.9, the lowest reading since January and the second lowest of the whole expansion. So far, rising oil prices have kept price pressures very elevated with the July prices paid index coming in at 80.8. With the trend in orders and recent decline in oil prices, we are likely to see lower numbers in August for both the composite index and for prices paid.
Composite index Consensus Forecast for August 08: 50.0
Range: 48.5 to 53.0
![[Chart]](chart.gif)
|
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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}