Tuesday, October 5, 2010

Stat of the Day: ISM Non-Manufacturing Jumps, Market Soars

The ISM Non-Manufacturing index came in at a surprisingly strong 53.2 today better then the 52 expected by economists. The market is up an average 1.5% today mainly due to the surprise jump, but also some relieve that the economy is not headed back down. With the reading of 51.5 in August, the major services sector was showing signs of possibly dipping below 50 signaling a potential double dip. This reading above 53 helps solidify the recovery.

Most of the sectors within the index showed positive changes from last month. New Orders jumped to 54.9, Inventories declined back to sub 50, Employment increased 2 points, and Prices Paid scaled back ever so slightly though still too high above 60. The only major issue in the report is that Business Activity actually dropped from 54.4 to 52.8. Business Activity has usually been seen as a better indicator of the health of the services sector and September was the first month that the Business Activity wasn't 2-3 points above the overall index. For those following the activity, it's a signal that the services market is actually still declining. Clearly though the market doesn't follow it so for now the stock market is soaring today.

NMI HISTORY
Month NMI Month NMI
Sep 2010 53.2 Mar 2010 55.4
Aug 2010 51.5 Feb 2010 53.0
Jul 2010 54.3 Jan 2010 50.5
Jun 2010 53.8 Dec 2009 49.8
May 2010 55.4 Nov 2009 48.4
Apr 2010 55.4 Oct 2009 50.1
Average for 12 months — 52.6
High — 55.4
Low — 48.4


Business Activity


Business Activity
%
Higher
%
Same
%
Lower

Index
Sep 2010 25 56 19 52.8
Aug 2010 27 53 20 54.4
Jul 2010 27 57 16 57.4
Jun 2010 35 56 9 58.1

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