Tuesday, April 5, 2011

ISM Non-Manufacturing Index Down 2.4 Points to 57.3 – Service Sector Growth Modestly Slower

In March, the Institute for Supply Management's Non-Manufacturing Index fell by 2.3 points to 57.3. The decline ends a six month improvement trend. Despite the drop, the index still remains strong. A value over 50 denotes service sector activity growth. So a the decline still represents expansion, but just at a slower pace than what occurred in February. Recovery is continuing.

Looking at the details of the report, output growth and employment growth slowed down. The output component fell 10.2 points to 59.0, while the employment component fell 1.9 points to 53.7. The forward looking indicators however, remained stable or even improved further. New orders fell only 0.3 point to a still strong 64.1 and backlogged orders rose 4.0 points to 56.0. Unless there are significant negative future economic shocks, it appears that service sector growth will continue at a solid pace in the upcoming months.

>50 = expansionMarFebJanDecNovOct
Headline Index57.359.759.457.156.054.6
    Business Output59.766.964.662.959.458.5
    New Orders64.164.464.961.458.556.6
    Backlogged Orders56.052.050.548.551.552.0

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