The ISM released the March 2008 Non-Manufacturing ISM Report On Business last week, reporting that the Non-Manufacturing Index (NMI) increased 0.3 percentage point to 49.6 from 49.3 in February. Although both numbers indicate mild contraction (both are below 50) they are a welcome rebound from the scary 44.6 number reported in January. This confirms my suspicion that the January number was hit hard by the change in seasonal adjustment factors they made that month. The figures, taken together, show a flat economy, which would produce a growth number in the 1-1.5% range for the first quarter.
Non-manufacturing business activity increased for the second consecutive month. The New Orders Index increased 0.6 percentage point to 50.2%, and the Employment Index contracted for the third consecutive month, remaining at 46.9%. The Prices Index increased to 70.8% in March, indicating a faster rate in price increases than in February. According to the NMI, 11 non-manufacturing industries reported growth in March. Members’ comments reflect concern about rising fuel and energy costs and the impact they are having on commodity prices.