ISM Non-Manufacturing June 2010 Index - 53.8%

The ISM Non-manufacturing report for June 2010 is out. The overall index decreased to 53.8%, lower 0.7 than the the last three months 55.4%. The index is normalized to 50 for the most part. Above 50 means growth, below 50 implies economic contraction.



Employment is in contraction again, after one month of growth. New orders dropped -2.7% from last month. Below is the employment index graph, normalized to zero for the expansion/contraction 50 inflection point, followed by a graph of new orders.


Manufacturing ISM for June 2010 - 56.2%

The June 2010 ISM Manufacturing Survey is out and PMI came in at 56.2%. This is a decline of -3.5% from last month's 59.7%. While this is the 11th month for expansion (anything above 50 is an expansion), this is a slowing on the manufacturing ISM. Why is this important? There is a relationship to overall GDP growth. The below GDP correlation numbers are annual. Taken to quarterly, the PMI correlation implies rough 2.2% Q2 2010 GDP. A correlation is not a fact so take this number with a wet thumb in the air.
(Q_i = ((Q_a + 1)^{-4})Q_{i-1})

The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (58.5 percent) corresponds to a 5.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for June (56.2 percent) is annualized, it corresponds to a 4.8 percent increase in real GDP annually.


ISM Non-Manufacturing index for April 2010 at 55.4%

The ISM Non-manufacturing report for April 2010 is out. The overall index flat lined to 55.4%, exactly the same as last month's 55.4%.



The employment index is below 50, at 49.5% and decreased from last month. New orders also slowed. While still above 50, new orders decreased from last month, by -4.1%, although business activity barely budged, up 0.3%. Below is the graph, normalized to zero to show contraction, on employment from the survey, followed by a graph of new orders.