Logistics business: ISM non-manufacturing index shows signs of growth
The Institute for Supply Management's non-manufacturing index for January inched back into positive territory, keeping the sector on track toward further growth.
Sean Murphy, Associate Editor -- Logistics Management, 2/3/2010
The Institute for Supply Management's Non-Manufacturing Index, or NMI, rose once again into positive territory in January, indicating non-manufacturing industries are following the growth trend set by the manufacturing sector.The NMI, measured in percentages, indicates growth when it hits 50 percent or higher. It slipped just below 50 in November, and stayed there until rising to 50.5 percent in January.
"It's small, incremental, but at this point, anything over 50 is a good thing," said Tony Nieves, chair of ISM's Non-Manufacturing Business Survey Committee.
Many other sub-indexes used by ISM to monitor the sector have been in positive territory and remain there. The production index came in at 52.2 percent, the new orders index climbed to 54.7 percent, and inventory sentiment rose to 64.5 percent in January.
Not all numbers are soaring, however. The new exports index remained at 46 percent, and imports dropped 5.5 points to 47 percent.
But Nieves said those figures weren't worrying.
"Everyone's just focused on reducing inventory," he said.
The real number to watch, he said, was employment. In January, it rose a single point, but still remained below 50 percent, at 44.6 percent. Typically, employment numbers lag behind the trend in the rest of the economy, both in manufacturing and non-manufacturing, whether the economy is up or down. Anyone wondering why so many positive numbers aren't pulling the NMI up higher, he said, need only look at employment.
"It's just ugly on the employment side right now, and that's what's bringing it down," he said.
Still, the trend beginning in 2009 was to see gradual, but definite growth, and with several indices, including the NMI, heading into positive territory, Nieves said the economy is still on track to recover.
"It looks like it's going to be sustainable," he said.
The only trouble, he said, is it's going at a snail's pace, and probably will continue to do that. The only good thing, he said, is that it's unlikely that the economy will sharply drop anytime soon, saying "It's not going to be huge spikes" in either direction.
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