econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 04 February 2015

January 2015 ISM Services Index Improves Marginally

Written by Steven Hansen

The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, and improved marginally from 56.5 to 56.7 (above 50 signals expansion). Important internals likewise strengthened.

This was within the range of market forecasts of 54.5 to 57.5 (consensus 56.5).

There are two sub-indexes in the NMI which have good correlations to the economy - the Business Activity Index and the New Orders Index - and both have good track records in spotting an incipient recession. The Business Activity Index improved and the New Orders Index marginally improved - with both remaining in territories associated with moderate expansion.

This index and its associated sub-indices are fairly volatile - and one needs to step back from the data and view this index over longer periods than a single month.

The Business Activity sub-index improved 2.9 points and now is at 61.5.

ISM Services - Business Activity Sub-Index

The New Orders Index improved 0.3 and is currently at 59.5.

ISM Services - New Orders Sub-Index

The complete ISM manufacturing and non-manufacturing survey table is below.

Econintersect does give serious consideration to this survey as the service sector accounts for 80% of the economy and 90% of employment. However, this an opinion survey and is not hard data.

From the ISM report:

Economic activity in the non-manufacturing sector grew in January for the 60th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 56.7 percent in January, 0.2 percentage point higher than the December reading of 56.5 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 61.5 percent, which is 2.9 percentage points higher than the December reading of 58.6 percent, reflecting growth for the 66th consecutive month at a faster rate. The New Orders Index registered 59.5 percent, 0.3 percentage point higher than the reading of 59.2 percent registered in December. The Employment Index decreased 4.1 percentage points to 51.6 percent from the December reading of 55.7 percent and indicates growth for the eleventh consecutive month. The Prices Index decreased 4.3 percentage points from the December reading of 49.8 percent to 45.5 percent, indicating prices contracted in January when compared to December. According to the NMI®, eight non-manufacturing industries reported growth in January. Comments from respondents vary by industry and company; however, they are mostly positive and/or reflect stability about business conditions.

INDUSTRY PERFORMANCE

The eight non-manufacturing industries reporting growth in January — listed in order — are: Accommodation & Food Services; Finance & Insurance; Management of Companies & Support Services; Public Administration; Wholesale Trade; Information; Health Care & Social Assistance; and Retail Trade. The eight industries reporting contraction in January — listed in order — are: Mining; Arts, Entertainment & Recreation; Construction; Other Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Educational Services; and Transportation & Warehousing.

Caveats on the use of ISM Non-Manufacturing Index:

This is a survey, a quantification of opinion. However, as pointed out above, certain elements of this survey have good to excellent correlation to the economy for as long as it has been in existence. Surveys lead hard data by weeks to months, and can provide early insight into changing conditions.

The main ISM non-manufacturing index (NMI) is so new that it does not have enough data history to have reliable certainty about how it correlates to the economy. Again, two sub-indices (business activity and new orders) do have good correlation for the limited history available.

No survey is accurate in projecting employment - and the ISM Non-Manufacturing Employment Index is no exception. Although there are some general correlation in trends if you stand far enough back from this graph, month-to-month movements have not correlated well with the BLS Service Sector Employment data.

ISM Services Employment Sub-Index vs BLS Non-Farm Services Employment

Related Posts:

Old Analysis Blog

New Analysis Blog

All Articles on Institute of Supply Management Surveys All Articles on Institute of Supply Management Surveys


>>>>> Scroll down to view and make comments <<<<<<



Permanent link to most recent post on this topic

Click here for Historical Releases Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.







Econintersect Economic Releases


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Tax Reform: The Good, the Bad, and the Really Ugly, Part Three
A New Era of Central Banking?
News Blog
Early Headlines: Asia Stocks, Dollar And Oil All Slip. Gold Steady, US Oil Exports Surge, Trump Backs Priv. Prisons, WH Hints Pot Crackdown, London Home Prices Slow, Trump Policies Will Help China And More
When Evidence Says No, But Doctors Say Yes
Pacific Rim States Affected By Trump's War On Free Trade
Real Paleo Diet: Early Hominids Ate Just About Everything
Amazon's Global Workforce Is Growing Rapidly
What We Read Today 23 February 2017
February 2017 Kansas City Fed Manufacturing At Highest Level Since June 2011
Lost In The Sixties-The Winds Of Change
January 2017 CFNAI Super Index Moving Average Statistically Unchanged
18 February 2017 Initial Unemployment Claims Rolling Average Insignificantly Improves
Jihadism: An Eerily Familiar Threat
Dynamic Stochastic General Equilibrium Forecast For February 2017
Infographic Of The Day: Guide To Tipping
Investing Blog
Can You Spot Low Risk Entries?
Technical Thoughts: Trading, Luck Or Skill?
Opinion Blog
Fed Up: Culture Shock
Kenneth Arrow's Ignored Impossibility Theorem
Precious Metals Blog
Deflation And Gold: A Contrarian View
Live Markets
23Feb2017 Market Close: Wall Street Closes Mixed Near The Unchanged Line, Nasdaq Closed Down Fractionally, The DOW Closes Up 35 Points, Crude And The US Dollar Remain Mostly Unchanged
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved