Non-manufacturing ISM rose much higher than expected, to 59.7 in May (consensus 55.8). This is a substantial increase from 56 in April and a four year low of 52.4 in March. Business activity has now been above 50 for 50 months in a row, indicating continued expansion. The headline figure is a separate question, and not an aggregation of the sub-components. Looking at the sub-components also shows strong growth during May.
Business activity, new orders, and employment all grew at a faster pace. New export orders increased by over 10 points to 66, an all-time high.
Prices also rose to 66.4 as almost every category of commodity price rose during the month. Prices have now risen for 48 straight months.
Only two of 14 industries reported decreased activity, and they were accommodation and food service, and wholesale trade. Even construction saw an increase in activity.
Inventories grew for the fourth month in a row, registering 61 for May. Most of the inventory growth appears to have been desired to prepare for future demand, except for real-estate. Thirty-three percent of respondents don't hold or measure inventories.
Tuesday, June 5, 2007
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