Monday, April 5, 2010

Stat of the Day: ISM Services Soars Above Expectations

The March ISM NMI or Services index came in at a strong 55.4 easily beating expectations and the 53 reported for February. Some of the numbers that stick out were the business activity and orders both jumping to 60+ while at the same time employment and inventories both remained in contraction mode. In fact, even though more companies are increasing inventories, we've still got companies decreasing as well. Prices paid are getting hot at 62, but with employment still contracting at a lot of businesses inflation will be contained.


  • "The NMI (Non-Manufacturing Index) registered 55.4 percent in March, 2.4 percentage points higher than the seasonally adjusted 53 percent registered in February, and indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 60 percent, reflecting growth for the fourth consecutive month. The New Orders Index increased 7.3 percentage points to 62.3 percent, and the Employment Index increased 1.2 percentage points to 49.8 percent. The Prices Index increased 2.5 percentage points to 62.9 percent in March, indicating an increase in prices paid from February. According to the NMI, 14 non-manufacturing industries reported growth in March. Respondents' comments are mostly positive about business conditions and the direction of the economy."

Index continues its steady growth out of the Great Recession. Its been a lot more methodical then some hoped, but over the last 2 months its finally hit the tipping point. At this point, I'd expect the remaining companies holding out on adding to inventories to finally relent as the recovery takes hold.


Month NMI Month NMI
Mar 2010 55.4 Sep 2009 50.1
Feb 2010 53.0 Aug 2009 48.2
Jan 2010 50.5 Jul 2009 46.7
Dec 2009 49.8 Jun 2009 46.3
Nov 2009 48.4 May 2009 44.5
Oct 2009 50.1 Apr 2009 43.9
Average for 12 months — 48.9
High — 55.4
Low — 43.9


10% more companies have cut inventory since December. Really?


Inventories
%
Higher
%
Same
%
Lower

Index
Mar 2010 21 51 28 46.5
Feb 2010 14 62 24 45.0
Jan 2010 16 61 23 46.5
Dec 2009 21 61 18 51.5

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