Subscribe to our free, weekly email newsletter!


December ISM non-manufacturing data turns in solid performance

By Jeff Berman, Group News Editor
January 04, 2013

The Institute for Supply Management (ISM) reported today that non-manufacturing sector economic activity showed growth for the 36th consecutive month.

In its monthly Non-Manufacturing Report on Business, the ISM reported that the index it uses to measure non-manufacturing growth—known as the NMI—was 56.1 percent in December, up 1.4 percent from November and slightly ahead of the 12-month average of 54.7. A reading above 50 represents growth. The PMI, the index on which the ISM’s Manufacturing Report on Business is based on, rose 1.2 percent to 50.7 in December, marking the third time it has been up in the past seven months.

The report’s four core metrics were mostly up on a sequential basis in December. Business Activity/Production was down 0.9 percent at 60.3, and New Orders were up 1.2 percent at 59.3, and Employment was up 6.0 percent at 56.3.

“When you look at the report overall, it is surprising that we saw [gains] in New Orders from where it was in November, as well as on the Employment side,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “That has really driven the NMI, even with Business Activity still strong although it slipped a little bit, but its rate of growth is still over 60 which is fast.”

Supplier Deliveries in December were down 0.5 percent to 48.5. Nieves pointed out that the NMI could have possibly been in the 60s had the rate of Supplier Deliveries not been as fast as they were.

The reason for the fast pace of supplier deliveries, he said, had to do with the fact that companies were working off of existing inventories, with little backlog in the system.

“If it stays on this pace something has to give and there has to be an inventory buildup as well as a slowing in deliveries, because the capacity will not be there,” he said.

December Inventories were up 3.0 percent at 50.0. Nieves said an inventory buildup is not occurring just yet or it may be a case of inventory levels being built up for the holiday season and subsequently depleted.

Looking at the Employment index being up 6.0 percent in December, Nieves said that growth rate may not be sustainable as that number tends to dip early in the New Year, with any uptick leveling off in February and March providing a truer picture of the direction and strength of the indices, adding that the end of the first quarter will provide a clearer outlook.

Going ahead, how things play out in January is pivotal because if there is a continued uptick in the data from December’s strong performance it could pave the way for a strong year, said Nieves.

And that was echoed in feedback from ISM survey respondents featured in the report. Respondents said that business conditions were picking up despite the current economic state and federal budget issues, and business picking up in the fourth quarter, among other factors.

December Exports and Imports were up 1.5 percent and down 6.5 percent, respectively. The slowdown in imports points to the unhealthiness of global markets at the moment, said Nieves.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Join Industry Expert Adrian Gonzalez for this educational webinar on the tenets and the benefits of Closed-Loop Operational Management. You’ll learn how Closed-Loop Operational Management optimizes orders, inventory, and transportation concurrently, and how it is able to optimize large-scale problems on a daily basis.

In a separate conference call following CP’s third quarter earnings release call yesterday, CP CEO Hunter Harrison make myriad convincing points for a merger between CP and CSX and offered up his take in general industry M&A as well.

Seasonally-adjusted (SA) for-hire truck tonnage in September checked in at 132.6 (2000=100) for the second straight month, remaining as the current all-time high level for the second month in a row, with November 2013’s 131.0 now the second best month recorded.

Ahead of its third quarter earnings call this Friday, freight transportation and logistics titan UPS rolled out rate increases for 2015 that are set to take effect on December 29, 2014.

The 'Internet of Things' or IoT is a term that has rapidly taken center stage in business and consumer technology circles, with tremendous amounts of hype in both. Don't be distracted if some of the hypothetical consumer examples of the IoT seem far-fetched; the trend has serious implications for businesses. This complimentary whitepaper takes a look at some of the opportunities afforded by the Internet of Business Things.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA