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ISM Non-Mfg Index  
Released On 2/3/2010 10:00:00 AM For Jan, 2010
PriorConsensusConsensus RangeActual
Composite Index - Level50.1 51.0 49.0  to 52.0 50.5 

New orders are the good news out the ISM's non-manufacturing report as they were the good news out of Monday's ISM report on the manufacturing side. New orders rose more than 2-1/2 points in January to 54.7, a reading that still lags manufacturing orders by more than 10 points but is still the strongest in more than two years. Rising orders point to rising business activity ahead, here defined as production, and to improvements for the labor market as well. The business activity index, still reflecting softness in new orders in prior months, slipped back 1 point to 52.2 while employment continues to show contraction, well below the break-even 50 level at 44.6 though up 1 point in the month.

The headline composite index continues to hover at no-change, up 7 tenths to 50.5 indicating flat conditions for the bulk of the economy. This reading stands in contrast to GDP which took off in the fourth quarter and which is expected to show continued though slower growth in the first quarter.

Other readings in today's report include pressure for prices paid, at 61.2, which reflects higher energy costs. Inventories fell back 5 points to 46.5 while backlogs fell 2.5 points to 45.5. But note that inventories and backlog in the non-manufacturing are very thin compared to those for manufacturers. Today's report is mixed but new orders do hold out hope for greater strength in future reports. Equities rose slightly in initial reaction to the results.

Consensus Outlook
The composite index from the ISM nonmanufacturing survey in December rose 1.4 points to 50.1, a level indicating very little month-to-month change in overall activity for the bulk of the economy. We may see some progress in January based on a surge in the Chicago PMI. Although this index covers both manufacturing and nonmanufacturing, a 2.8 point jump to 61.5 suggests at least some improvement in nonmanufacturing. However, the ISM nonmanufacturing new orders index has been soft recently, barely above breakeven.

The Institute For Supply Management surveys more than 375 firms from numerous sectors across the United States for its non-manufacturing index. This index covers services, construction, mining, agriculture, forestry, and fishing and hunting. The non-manufacturing composite index has four equally weighted components: business activity (closely related to a production index), new orders, employment, and supplier deliveries (also known as vendor performance). The first three components are seasonally adjusted but the supplier deliveries index does not have statistically significant seasonality and is not adjusted. For the composite index, a reading above 50 percent indicates that the non-manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. The supplier deliveries component index requires extra explanation. A reading above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries. However, slower deliveries are a plus for the economy -- indicating demand is up and vendors are not able to fill orders as quickly.  Why Investors Care
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.
Data Source: Haver Analytics

2010 Release Schedule
Released On: 1/62/33/34/55/56/37/68/49/310/511/312/3
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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