March ISM Business Activity Reaches 4-Year High

From today's Non-Manufacturing ISM report:

"ISM's Non-Manufacturing Business Activity Index in March registered 60 percent, an increase of 5.2 percentage points when compared to the seasonally adjusted 54.8 percent in February (see chart above). Thirteen industries reported increased business activity (Utilities; Information; Mining; Retail Trade; Construction; Finance & Insurance; Management of Companies & Support Services; Wholesale Trade; Accommodation & Food Services; Other Services; Professional, Scientific & Technical Services; Public Administration; and Health Care & Social Assistance) and three industries reported decreased activity for the month of March (Real Estate, Rental & Leasing; Educational Services; and Transportation & Warehousing).

Comments from respondents include: "Seeing an increase in business. Our customers are feeling more optimistic"; and "New year budgets, as well as replacing inventories depleted during 2009."

MP: The ISM Business Activity Index for non-manufacturing industries has now been in expansion (index > 50) for seven out of the last eight months, and for four straight months, both for the first time in almost two years. The last time the Business Activity Index was at 60 or higher was April 2006, almost four years ago. Finally, as the red circles in the graph indicate, the current level of business activity (index = 60) is equal to: a) the index level in 2002 that signalled the end of the 2001 recession, and b) the index level in the summer of 2007 in the pre-recessionary period of economic expansion. Along with the economic momentum gaining strength in the manufacturing sector, this strong rebound in the non-manufacturing sector provides further evidence that a strong, unmistakable V-shaped economic recovery is underway.