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 8/3/07 For Jul 2007 | ||||||||||||
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Highlights
U.S. economic growth slowed noticeably in July according to the ISM surveys, first Wednesday's report on the manufacturing side and now today's report on the non-manufacturing where the headline index fell back to 55.8 vs. June's very strong 60.7. Showing clear slowing were new orders, 52.8 vs. 56.9, and employment 51.7 vs. 55.0.
Inventories also increased, to 55.0 vs. 52.5 in a bad sign consistent with similar indications in the manufacturing report. The inventory gains suggests that supply managers were caught a bit off guard by the month's slowing and were unable to keep inventories from backing up. But a good sign was a jump in backlog orders to 53.0 vs. 46.5. Solid orders in the pipeline will give supply managers extra freedom to realign inventories. Prices paid showed a bit less pressure, at 61.3 down 4.2 points and similar to the reading on the manufacturing side.
Treasuries rallied in reaction to the report which together with today's moderate employment data point to easing momentum in the economy. Overall all indications from July should ease inflation concerns at the Federal Reserve, a plus for interest rates and most markets with the exception of the dollar.
The business activity index from the ISM non-manufacturing survey was healthy in June, rising to 60.7 from 59.7 in May. Incoming orders remain brisk, at 56.9 vs. May's 57.4. Price increases for raw materials held steady at a moderate 65.5 vs. 66.4 in May.
Business activity index Consensus Forecast for July 07: 58.5
Range: 57.0 to 60.7
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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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