Economic Calendar

Friday, October 3, 2008

U.S. ISM Non Manufacturing Index In Line With Expectations

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Daily Forex Fundamentals | Written by TD Bank Financial Group | Oct 03 08 15:28 GMT |

* The US Non Manufacturing Index was 50.2 in September which is largely in line with expectations and only modestly lower than in August.
* The components did not reveal any massive deterioration, which was in contrast to what we saw earlier in the week with the ISM manufacturing index.

The US non manufacturing index was 50.2 in September, which was the second consecutive month where the index was a tad higher than the 50-threshold delineating expansion and contraction. The 6-month average of the composite index is 50.4. In terms of the underlying components, there were no massive declines in any one category. On balance, it shows a lacklustre tone in the non manufacturing sector.

The employment sub index remains under pressure, suggesting the labour market for non manufacturing remains weak. At 44.2 in September, the employment sub index is the lowest since June and still two points below the 6 month average in the index. However, the order pipeline remains decent. New export orders perked back up above 50 for the first time since June and was 50.5 in September. Moreover, the new orders index was 50.8 in September, which was the first above-50 reading since May. That suggests the order pipeline has not completely imploded, which is a modest plus in an environment where most of the economic data this week has been disappointing.

Prices paid continues to moderate and that sub index was 70 in September, and is clearly scaling back after peaking at 84.5 in June. But in conjunction with tepid demand, and the global correction in commodity prices, this result is not particularly surprising.
Against the backdrop of current economic conditions, the lacklustre tone in the non manufacturing sector seems to be as good as it gets. How long the ISM non manufacturing activity index stays above 50 remains to be seen, especially given the slowdown in the global economy. But for now, the fact that the data was in line with expectations should be seen as a positive.

TD Bank Financial Group

The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.


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