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Wednesday, August 20, 2014

ISM Charts Slower Growth in Non-Manufacturing Sector

ISM logoAlthough index metrics declined in September from August, non-manufacturing business activity continued growing, albeit at a slower pace, for the 45th consecutive month, reports the Institute for Supply Management (ISM).

ISM says that its index readings of non-manufacturing activity that exceed 50 indicate that this part of the U.S. economy is expanding, while readings below 50 are signs of contraction. So even though most index categories in September lost ground compared with August, overall growth continues with an overall reading of 54.4.

In the Non-Manufacturing ISM (NMI) Report on Business, the September index was a 4.2 point decline from August. Business activity, based on ISM’s survey of purchasing managers, dropped 7.1 points to 55.1. In other areas, employment was down 4.3 points to 52.7; new orders declined 0.9 points to 59.6; supplier deliveries fell 4.5 points to 50, indicating a modest improvement in on-time performance (readings above 50 mean slower deliveries, and readings below 50 indicate faster deliveries); and order backlogs were unchanged at 50.5.

Imports fell by 3.5 points to 51.5, while export orders were up 7 points to 57.5. The prices purchasing agents paid remained on an upward trend, showing a 3.8-point rise from August to 57.2. Inventories continued to grow last month, though at a slower rate, falling 1.5 points to 54.5. Though it declined by 1.5 points, inventory sentiment remained high at 62.0, which means respondents are concerned about how much product they have on hand and the cost this entails.

Survey respondents were generally positive about business, although more expressed doubts in comments about the direction of the economy.

Eleven non-manufacturing industries showed growth in September, among them retail trade, wholesale trade, transportation and warehousing, construction, utilities, and information.


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