Thursday, June 03, 2010

ISM Non-Manufacturing Back to 2007 Levels

From today's Non-Manufacturing ISM Report On Business:

"ISM's Non-Manufacturing Business Activity Index in May registered 61.1 percent, an increase of 0.8 percentage point when compared to the 60.3 percent registered in April (see chart above). Sixteen out of 18 industries reported increased business activity, and one industry reported decreased activity for the month of May. One industry reported no change from April.

The industries reporting growth of business activity in May — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Management of Companies & Support Services; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; Construction; Transportation & Warehousing; Information; Retail Trade; Professional, Scientific & Technical Services; Other Services; Public Administration; Utilities; and Finance & Insurance. The only industry reporting decreased business activity in May is Health Care & Social Assistance."

MP: The ISM Business Activity Index for non-manufacturing industries has now been in expansion (index > 50) in 9 out of the last ten months, and for six straight months, both for the first time since 2007, before the recession started.  The last time the Business Activity Index was above 61 or higher was February 2006, more than four years ago.  These recent improvements in the ISM Business Activity index provide more evidence of an ongoing, V-shaped economic recovery. 
Note: The overall ISM Non-Manufacturing Composite Index (NMINMI (started in January 2008), and that reading still signals expansion (above 50).   And as Brian Wesbury points out, the Business Index is more closely related to real GDP growth than the overall NMI.


At 6/03/2010 12:55 PM, Blogger bob wright said...

Significantly, from the report you site:

"the Employment Index increased 0.9 percentage point to 50.4 percent, reflecting growth for the first time after 28 consecutive months of contraction."

(emphasis mine)

At 6/03/2010 1:08 PM, Anonymous morganovich said...

that's an index, not an output level.

it shows growth and contraction, not absolute level. it works just like a % growth indicator. (over 50 = growth, under = contraction)

the 9 months above 50 have not done anything like made up for the deeper and longer previous trip below 50.

they are showing lower % gains than the recession showed declines (by around 35% eyeballing it) when percentage gains would need to be higher than the decline to make a "v" shape.

how do you figure that's a V?

i'm eyeballing as i can't find a link to the actual data in any kind of useful form, but there is no way area under curve here (using 50 as a bifurcation) looks like a v.


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