Highlights
The Institute For Supply Management's non-manufacturing index fell back sharply in February, to 54.3 from 59.0 in January. The drop was below consensus but really comes as no surprise given new order readings that have sharply trailed the main index in recent months. New orders slipped from January's 55.4 to 54.8, no longer trailing the main index and perhaps signaling stability ahead. But backlog orders did fall, down 2 percentage points to 47.0 for a third straight sub-50 reading. The backlog decline was centered in housing-related industries with other industries flat.

Lower order readings will give non-manufacturers time to adjust inventories to demand. Inventories popped up slightly to 50.5 in the month to suggest that slower demand may have backed up stocks. Supplier deliveries improved slightly in the month to 52.5 to indicate that there are few delays in the supply chain, another positive that will allow non-manufacturers to work down inventories.

Prices paid showed little pressure at 53.8, down 1.4 percentage points in the month and roughly in line with last week's reading on the manufacturing side. Higher oil prices or not, slowing demand is likely to keep a lid on future price pressures. Employment edged higher to 52.2, up five tenths in the month to indicate if nothing else that non-manufacturers feel secure enough in the outlook to keep hiring.

Treasuries firmed and stocks weakened in immediate reaction to the results, which are latest to suggest economic softening. The data may also weigh on jumpy international markets which are growing more and more concerned over U.S. weakness.

2007 Release Schedule

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