ISM’s non-manufacturing index rose slightly in February, pointing towards continued economic growth. New orders downshifted for the month but the employment component posted a sizable improvement.
ISM Remains Firmly in Expansion Territory
- The headline ISM non-manufacturing index rose to 56.9 for the month, marking an improvement in the index for the second month in a row. Business activity did soften a bit but came off a strong reading in January.
- New orders, a forward-looking measure of activity, showed that activity is likely to downshift a bit in the months ahead; the measure fell to 56.7 from 59.5 in February.
Employment Component Suggests Strong Job Gains
- Today’s report reinforces the view of ongoing improvement in the labor market, as the employment component of the index rose to 56.4 from January’s 51.6 reading. We expect that February was another month of solid job growth.
- The prices paid component bounced back a bit with the stabilization in oil prices, but continued to signal that input prices were not a major concern for purchasing managers.
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