Logistics and business news: ISM report indicates employment still lags economic recovery
Sean Murphy, Associate Editor -- Logistics Management, 11/4/2009
The figures from the Institute for Supply Management's latest monthly report show continued growth in the non-manufacturing sector, but in the end, the future of the economy will be defined by one thing: jobs.
That's the message from Anthony Nieves, chair of ISM's non-manufacturing business survey committee, after reviewing the results of the survey for the month of October.
The non-manufacturing index (NMI) fell by 0.3 percentage points from September to October, ending at 50.6 percent.
That still shows that non-manufacturing industries are growing, Nieves said, but the four main indices-new orders, business activity, employment and supplier deliveries, present a mixed bag, with employment standing out as the consistently worst performer, dropping 3.2 points to 41.1 percent.
Employment, Nieves said, typically lags behind the rest of the sector, but the consistently poor figures are holding back the rebound in the economy that industry leaders have been looking for.
"Employment's dragging it down," he said.
The lack of jobs is translating into less spending, which continues to hamper the economy, he said. October marked the 21st time in 22 months that the employment index has been labeled "contracting" by the ISM. As to whether the overall economy can continue to improve under these conditions, Nieves said, "It just remains to be seen."
Unlike past recessions, Nieves said this time companies were changed permanently, spending so much time on cost-cutting and increasing efficiency, it's very possible that they won't want to re-fill empty positions.
"I don't think employment will ever come back to where it was," he said.
On a lighter note, the new orders index continued to climb, rising 1.4 points to 55.6 percent. In addition, supplier deliveries went up 0.5 points to 50.5 percent. That means the deliveries are slower, and Nieves said that's a good thing.
"As demand picks up, you'll see supplier deliveries slow," he said.
Business Activity also picked up by 0.1 points to 55.2 percent over September's numbers.
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