by Calculated Risk on 2/03/2006 02:50:00 PM

Institute for Supply Management reports: Business Activity at 56.8%.

"Non-manufacturing business activity increased for the 34th consecutive month in January," Kauffman said. He added, "Business Activity and New Orders increased at slower rates in January than in December. Imports, Employment and New Export Orders also increased at slower rates while Prices increased at the same rate as in December. Eight of 16 non-manufacturing industry sectors report increased activity in January compared to 11 that reported increased activity in December. While in almost all indexes growth declined in January, they are still above the value of "50" indicating that growth continues, but at slower rates of growth. Members' comments in January continue to be generally positive concerning current business conditions. Several members mention concerns about the continued high level of energy prices and rising interest rates. The Prices Index held steady this month, but remains in a historically high range for the ISM Non-Manufacturing Business Survey. The overall indication in January is continued economic growth in the non-manufacturing sector, but at slower rates of increase."

The weakest industries were: Agriculture; Wholesale Trade; Real Estate; Retail Trade; and Construction. This might be a hint of the housing slowdown, although the BLS numbers showed construction employment was solid in January.

Some of the details are interesting:

Index	Jan.	Dec.	Change	Direction	Rate
Business Activity / Production	56.8	61.0	-4.2	Increasing	slower
New Orders	56.0	62.2	-6.2	Increasing	Slower
Employment	51.1	56.9	-5.8	Increasing	Slower
Supplier Deliveries	54.5	56.5	-2.0	Slowing	Slower
Inventories	55.0	56.0	-1.0	Increasing	Slower
Prices	67.2	67.2	0	Increasing	At same rate
Backlog of Orders	52.5	54.0	-1.5	Increasing	Slower
New Export Orders	58.0	61.5	-3.5	Increasing	Slower
Imports	49.5	56.5	-7.0	Decreasing	From Increasing
Inventory Sentiment	63.0	59.0	+4.0	"Too High"	Greater

Many activities are still increasing, but at a slower rate than in December. Employment is barely increasing (51.1) and prices are perceived to be a problem. Inventory sentiment is to too high and increasing at a greater rate. And imports are now decreasing (slightly). All signs that the expansion may be past its peak.