Econoday Economic Report: ISM Non-Mfg Index December 5, 2012

2012 Economic Calendar

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ISM Non-Mfg Index

Released On 12/5/2012 10:00:00 AM For Nov, 2012

	Prior	Consensus	Consensus Range	Actual
Composite Index - Level	54.2	53.6	50.0 to 55.0	54.7

Highlights
The non-manufacturing sector picked up steam in November but the gains did not lead to new hiring. The ISM's index rose five tenths to 54.7 with business activity over 60 for the first time since February. New orders are near 60 at 58.1 for a more than three point gain and the best reading since March. But employment is barely over 50, at 50.3 for a nearly five point monthly dip for the worst reading since July. Businesses are doing more with less as seen in this morning's productivity report and in the details of this report. But still, the gain in activity and orders is good news.

Market Consensus before announcement
The composite index from the ISM non-manufacturing survey in October posted at 54.2, safely above 50 to indicate monthly growth though at a slightly slower rate of monthly growth than September's 55.1. Growth in new orders slowed a bit but the 54.8 reading was healthy and points to activity down the production chain in the months ahead. Business activity, akin to a production index in this report, also slowed but at 55.4 was still solid and compared to 59.9 in September.

Definition
The non-manufacturing ISM surveys more than 375 firms from numerous sectors across the United States, including agriculture, mining, construction, transportation, communications, wholesale trade and retail trade. 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

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