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 10/3/07 For Sep 2007 | ||||||||||||
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Highlights
Business activity in bulk of the nation's economy slowed slightly in September to a still active pace, according to the ISM's non-manufacturing index which dipped one full point to 54.8. In a good sign for Friday's employment data, the report's employment index snapped back strongly to 52.7 from August's unusually weak 47.9 which at the time did correctly point to weakness in August's payroll data.
But the outlook for future activity is uncertain given weakness in order readings. New orders are still above 50 but did fall to 53.4 vs. 57.0 in August. And backlog orders fell from an even 50.0, down 3 points to 47.0. Export orders, as they did in Monday's ISM report on the manufacturing side, showed surprising softness, down 3.5 points to 50 to show no growth for the month. The weakness comes despite softness in the dollar and may hint at a topping out in foreign demand.
Other readings included a sharp fall in inventories, down 7 points to 50.0. The ISM manufacturing report showed similar results, suggesting that purchasers are using this time of soft demand and lack of shortages to pare back inventory costs. Prices paid showed increasing pressure to 66.1 vs. 58.6, no doubt related to high energy costs.
The dollar firmed very slightly while Treasuries were unchanged immediately following the results. Today's data suggest that the economy is slowing but only gradually.
The business activity index from the ISM non-manufacturing survey was unchanged in August, at a very solid 55.8 that points to steady economic growth through the second half of the year. But since that report, we have had notable swings in durables orders and the Fed will continue to cull as much anecdotal and industry data as possible before making its next monetary policy vote.
Business activity index Consensus Forecast for September 07: 54.5
Range: 54.0 to 56.4
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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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