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. Financial market players monitor the business activity index, because a composite index, like its manufacturing cousin, is not compiled by the ISM. Why Investors Care
| Released on 6/5/07 For May 2007 | ||||||||||||
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Highlights
In a volatile report mostly showing strength, the Institute For Supply Management's non-manufacturing index jumped to 59.7 in May, its strongest reading since April 2006 and compared against 56.0 this past April. New orders, at 57.4, were the strongest since September and compare against 55.5 in April. But backlog orders, down 2 points to 48.0, showed month-to-month contraction that would seem to be inconsistent with rising activity. Inventories were also puzzling, showing sharp accumulation at 61.0, up a striking 9 points in the month. Stronger activity usually results in draw downs unless the report's respondents, that is purchasers at the nation's non-manufacturing firms, are building inventories in anticipation of stronger output ahead.
Employment showed strength, up 3 points to 54.9, while prices continued to show pressure at 66.4, up nearly 3 points. Export orders really spiked, up nearly 11 points to 66.0. But this index on the non-manufacturing side is dominated by only a handful of firms, making month-to-month swings common.
Treasuries weakened and the dollar firmed in immediate reaction to the results. But the cross-currents in the report may limit its impact on the rest of the session and on the economic outlook as well.
The business activity index from the ISM non-manufacturing survey rose in April to 56.0 from a multi-year low of 52.4 in March. As are most non-housing indicators, the ISM non-manufacturing index is pointing toward a rebound in economic activity in the second quarter.
Business activity index Consensus Forecast for May 07: 56.0
Range: 54.0 to 58.0
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The ISM non-manufacturing survey does not compile a composite index like its manufacturing cousin. The business activity index, which is actually akin to the production index in the manufacturing survey, is widely followed as the key figure from this survey. |
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