IB Net Payout Yields Model

Stat of the Day: ISM Non Manufacturing Index Slumps

ISM reported this morning a very disappointing number for their November Non Manufacturing Index (NMI) or sevices. The index came in at 48.7 with expectations around 51.5. This number was much weaker then expected and doesn't really jive with other economic reports that have been very bullish such as Initial Jobless Claims that came in much better then expected. Being that the NMI number is very much correlated to sentiment then hard facts, it's possible that emotions were heavily influential in this report.

All of the different categories were weaker though New Orders remained relatively strong at 55. The really confounding numbers are that Production was slightly negative at sub 50 and New Orders were up at 55, but somehow Backlog dropped to 48.5.

"The NMI (Non-Manufacturing Index) registered 48.7 percent in November, 1.9 percentage points lower than the 50.6 percent registered in October, indicating contraction in the non-manufacturing sector after two consecutive months of expansion. The Non-Manufacturing Business Activity Index decreased 5.6 percentage points to 49.6 percent, reflecting contraction after three consecutive months of growth. The New Orders Index decreased 0.5 percentage point to 55.1 percent, and the Employment Index increased 0.5 percentage point to 41.6 percent. The Prices Index increased 4.8 percentage points to 57.8 percent in November, indicating an increase in prices paid from October. According to the NMI, six non-manufacturing industries reported growth in November. Respondents' comments remain cautious about business conditions and reflect concern over the length of time for economic recovery."

Month NMI Month NMI
Nov 2009 48.7 May 2009 44.0
Oct 2009 50.6 Apr 2009 43.7
Sep 2009 50.9 Mar 2009 40.8
Aug 2009 48.4 Feb 2009 41.6
Jul 2009 46.4 Jan 2009 42.9
Jun 2009 47.0 Dec 2008 40.1
Average for 12 months — 45.4
High — 50.9
Low — 40.1


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