Subscribe to our free, weekly email newsletter!


ISM NMI remains on a positive growth track in March

By Jeff Berman, Group News Editor
April 05, 2011

The Institute for Supply Management’s (ISM) Non-Manufacturing Report on Business again showed positive growth for the 16th consecutive month.

The ISM’s index for measuring the sector’s overall health—known as the NMI—was 57.3 in March, 2.4 percentage points less than February’s 59.7. But despite the slight decrease, a reading above 50 represents growth.

The NMI’s total reading is largely based on four core metrics. In March, they all showed declines to a certain degree, with Business Activity/Production down 7.2 percent at 59.7, New Orders off 0.3 percent at 64.1, and Employment falling 1.9 percent to 53.7.

“It is still continued growth even if it has slowed down a bit,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “The composite was dragged down by the Business Activity index, but New Orders has not come down much. Some of this could have to do with cycle time, in terms of New Orders coming in and not immediately being part of the Business Activity mix, as that varies by industry and company.”

Even though the NMI is down, March’s reading is still very strong, especially when compared to March 2010, said Nieves and when compared to the growth rates of the previous two months.

And the 0.3 percent decline in New Orders essentially offsets the 7.2 percent drop in Business Activity/Production, given the strong overall reading, noted Nieves.

Japan situation: “In non-manufacturing, we are not going to see the impact of things from the situation in Japan, and Japan is importing many components it uses in manufacturing, while it does not manufacture as much as other countries in the Asia-Pacific,” said Nieves.

ISM survey respondents in the agriculture, forestry, fishing, and hunting sectors noted that while current business levels are steady, there is concern about high fuel costs and the speed of the Japanese recovery, which has a more direct impact on those sectors.

“What is happening in Japan will have a more direct impact on manufacturing than non-manufacturing,” said Nieves.

Looking at the NMI Prices, March Prices slipped 1.2 percent to 72.1, which Nieves said is still strong and more directly related to increasing fuel prices rather than high commodity prices, which are also up.

Fuel is particularly important to the distribution component of the non-manufacturing sector through over-the-road trucking and has a significant impact on the costs of goods sold for non-manufacturing operations.

“Increases in fuel and other petroleum-related products always result in price increases for things like plastics and other things,” said Nieves.

March Inventories were flat compared to February at 55.0 and Supplier Deliveries were down only 0.5 percent at 51.5. Nieves noted that Inventories actually grew from February but it occurred at the same rate. And with Inventories growing, he said Supplier Deliveries have not been impacted.

“What is interesting when looking at those numbers is that Backlog of Orders in March was up 4.0 percent from February at 56.0 percent,” said Nieves. “This leads me to believe that the current capacity levels can be supported at the moment.”

Looking at the overall growth for the first quarter of 2011, Nieves said the NMI has exceeded expectations, especially in January and February. Because of this he noted the “bar has been raised,” especially when compared to the first quarter of 2010.


For related articles, please click here.

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

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

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