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 7/5/07 For Jun 2007 | ||||||||||||
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Highlights
The ISM non-manufacturing index is signaling solid growth, at 60.7 in June vs. 59.7 in May. The employment index, important ahead of tomorrow's monthly jobs report, is also signaling solid growth, at 55.0 for a gain of 1 tenth in the month. This index has been on the climb, up from 50.8 in March.
There was a lot of volatility on supply chain readings, showing a sharp slowing in inventories (52.5 vs. 61.0) and a further decline in backlog orders (46.5 vs. 48.0). This may indicate that non-manufacturers are moving deliverables out the door. Incoming orders remain brisk, at 56.9 vs. May's 57.4. Price increases for raw materials are steady, at an unalarming 65.5 vs. 66.4.
Treasuries eased and the dollar firmed in initial reaction to the report. Further reaction isn't likely given the approach of tomorrow's employment report, but this report, especially together with the ISM's report on the manufacturing side, is pointing to accelerating conditions for the second half of the year.
The business activity index from the ISM non-manufacturing survey jumped to 59.7 in May, from 56.0 in April. However, other components showed a mixed picture for looking ahead. New orders, at 57.4, were the strongest since September but backlog orders slipped 2 points to 48.0 - somewhat contradictory movement relative to each other. Inventories were also puzzling, showing sharp accumulation at 61.0, up 9 points for the month. Businesses could be building inventories in anticipation of stronger demand.
Business activity index Consensus Forecast for June 07: 57.5
Range: 56.5 to 60.0
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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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