Logistics business: ISM non-manufacturing index slips in July
July index is down, but current economic recovery predictions remain intact
Sean A. Murphy -- Logistics Management, 8/5/2009
TEMPE, Ariz.—The latest non-manufacturing sector report from the Institute for Supply Management (ISM) showed a slip in recent growth, but current predictions of economic recovery are still on track, according to Anthony Nieves, chair of ISM’s Non-Manufacturing Business Survey Committee.
While the manufacturing sector has shown steady growth for the past seven months, non-manufacturing has fluctuated back and forth. Still, Nieves said he expected to see more stable, level figures for July.
Instead, he said, the non-manufacturing index (NMI) slipped 0.6 points to 46.4 percent, and other figures also dropped unexpectedly.
“This was a surprising report,” Nieves said.
Summer, as a rule, is a typically slow time for non-manufacturing industries, but only seven out of 17 industries reported any growth in July. The business index, poised to cross the 50 percent mark in June at 49.8 percent, fell to 46.1 percent. New Orders fell from 48.6 to 48.1 percent in July, too.
Some industrial declines, such as travel and tourism, reflected the current consumer attitude still fueled by the recession, Nieves said.
“People are just keeping their purse-strings tight,” he said.
But not everything is doom and gloom. Nieves said the real estate, rental and leasing industry has reported growth. So too has health care, of which Nieves said “it has probably been the one sector that’s been most recession resistant.”
Nieves also looked to the manufacturing sector as a positive sign, too. However fickle non-manufacturing has proven to be, the steady growth in manufacturing is a good sign that non-manufacturing will soon follow suit. Typically, Nieves said the manufacturing sector shows the first signs of decline when the country falls into a recession, and eventually shows the first signs that the country is climbing out of one.
Right now, ISM is predicting both sectors will show positive growth before the end of the year, and possibly before the end of the fall. Nieves said the non-manufacturing sector is still on track with that prediction, despite the backslide recorded in July.
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