Services Advance, Factory Productivity Is Lowered

Jan. 13, 2005
By John S. McClenahen Unlike the manufacturing sector of the U.S. economy, which last month appeared still to be contracting, the non-manufacturing sector in May expanded for the second consecutive month. The non-manufacturing business activity index ...
ByJohn S. McClenahen Unlike the manufacturing sector of the U.S. economy, which last month appeared still to be contracting, the non-manufacturing sector in May expanded for the second consecutive month. The non-manufacturing business activity index compiled by the Institute for Supply Management, Tempe, Ariz., reached 54.5% last month, up 3.8 percentage points from April's 50.7% mark and the index's best showing since its 54.5% in January of this year. New orders, inventories, order backlogs and imports all increased during May. "However, export orders fell below the 50[%] mark again, suggesting that a weaker [U.S.] dollar has yet to propel an export boom," says Maury Harris, chief U.S. economist at UBS Warburg, New York. For the overall index, a mark above 50% indicates that the non-manufacturing sector generally is expanding; a figure below 50% signals that it is contracting. Meanwhile, the U.S. Labor Department has released revised U.S. productivity data for the first quarter of this year. Both the 2.5% annual rate of productivity increase for the business sector and the 1.9% rate if increase for the nonfarm business sector were a bit higher than preliminary numbers released a month ago. However, the revised 1.9% annual rate of productivity increase for manufacturing was two-tenths of a percentage point below the 2.1% initially reported. The new number reflects "a downward revision in productivity growth in durable goods manufacturing, which comprises about 60% of employment in the sector," the Labor Department explained.

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