Thursday, October 3, 2013

ISM Nonmanufacturing Index Dipped in September

The ISM nonmanufacturing index dipped in September to 54.4, from a post-recession high of 58.6 the previous month. The drop follows two months of large gains, and is still above second quarter levels. However, the drop is the largest since late 2008. Despite the decline, September’s reading remains strong, with any reading above 50 representing industry expansion.

The heightened policy uncertainty and forthcoming government shutdown could put more downward pressure in October. The economic cost of the government shutdown continues to grow each additional day of the shutdown, and may have already cost between 0.1 and 0.2 of a percentage point of fourth quarter GDP.

The details of September’s report were mostly weaker in comparison to the past month. The employment index shrank to 52.7, the lowest value in 4 months, and more than offset August’s gains. New orders declined 0.9 to 59.6, and backlogged orders remained constant at 50.5. Business output decreased to 55.1, from 62.2 the previous month.

On a positive note, exports increased by 7.0, which helps the trade deficit.

Read the ISM release.

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