ISM Non-Manufacturing Index Posts Solid Rise

The ISM non-manufacturing index rose a solid 1.1 points in March to a 54.5 level that points to solid economic growth for the great bulk of the nation's economy. New orders are very solid at 56.7 for what is their strongest rate of monthly growth so far this year. Backlog orders, at 52.0, show plus-50 monthly expansion for a third month in a row.

And strength in backlogs is a particularly good sign for employment which, however, has been flat in this report, at 50.3 in the March report for however a 6 tenths gain. Output is especially strong as the business activity index, at 59.8, is showing its best rate of growth in 5 months which points to acceleration for the overall economy. In perhaps an early sign of the positive effects of the lower dollar, the new export orders index is up a very sharp 5.0 points to 58.5 in what follows a 7 point surge in February.

This report is very positive and contrasts sharply with the very soft services report released earlier this morning from Markit Economics. And the contrast isn't due to the extra components in the ISM report -- construction and mining -- which are mixed in the month with construction up in the ISM data and mining down. This report is closely watched and optimists can point with confidence to its indications of strength.

Recent History Of This Indicator:
Slowing steadily for seven months, the ISM non-manufacturing index correctly signaled the second-half dip in GDP and may now be signaling disappointing growth for the first quarter. But components for new orders and backlogs have continued to show strength and forecasters see a bounce for the index in March, to a consensus 54.0 for March vs 53.4 in February.