Subscribe to our free, weekly email newsletter!

ISM non-manufacturing data shows growth in May

By Jeff Berman, Group News Editor
June 03, 2011

Despite a backdrop of negative jobs reports, sluggish home sales, and cautious consumer spending, the non-manufacturing sector remains in decent shape based on the results of the Institute for Supply Management’s (ISM) Non-Manufacturing Report on Business, which showed growth for the 18th consecutive month in May.

The ISM’s index for measuring the sector’s overall health—known as the NMI—was 54.6 in May, 1.8 percentage points higher than April’s 52.8.  A reading above 50 represents growth.

The NMI’s total reading is largely based on four core metrics. In May, three of the four were ahead of April’s levels, with Business Activity/Production down 0.1 percent at 53.6, New Orders up 4.1 percent at 56.8, and Employment up 2.1 percent to 54.0.

“I was pleasantly surprised when I saw the numbers come in, especially with the New Orders index” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “This report came in better than expectations, especially on the heels of the ISM manufacturing report this week [which declined]. What we are seeing here is that non-manufacturing is such an eclectic sector and even with retail off the strength of the rest of the sector pulled it along. And the employment picture is looking up again, too.”

And with the NMI over 50, May continues a sustained stretch of continuous growth at a slow and incremental pace.

With summer quickly approaching, Nieves said it will be interesting to see how the data trends out in the coming months, which tend to wane somewhat due to the seasonal components of which its data is based on.

When asked what the drivers were for new order growth in May, Nieves explained that fuel was not a factor, as prices were still on the rise prior to when this data was collected. But next month, declining fuel prices could be reflected in the ISM data. Prices were down 0.5 percent to 70.1 in May.

Going forward, Nieves said it is realistic to expect the NMI to be in the mid-50s over the next few months, possibly hitting the high 50s, with a chance of getting into the 60s closer to the fall.

On the employment side, Nieves said that employment in the non-manufacturing sector is seasonally-adjusted, adding that this data takes into account recent trends and timing of the year.

“For employment, we tend to see some slippage in the summer months as it relates to different indices,” said Nieves. “And some sectors like textiles shut down in the summer which factors into these numbers.”

While many economists lately are pointing to a so-called “soft patch” in the economy at the moment, Nieves said non-manufacturing is seeing more of a steady flow in growth and is not experiencing the spikes seen in other sectors like manufacturing, which began this year on a torrid growth path.

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

As was the case a month ago, the Global Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates is calling for annual import cargo volume gains at United States ports, as retailers gear up for the holiday season.

More than nine months after saying it was not for sale, Long Beach Calif.-based non asset-based third-party logistics (3PL) services provider UTi Worldwide has apparently changed its tune, with the company saying it has entered into a definitive agreement to be acquired by Denmark-based global 3PL DSV for $1.35 billion and $7.10 per share.

September carloads—at 1,417,750—were down 4.9 percent—or 72,597 carloads— annually, and intermodal—at 1,365,980 trailers and containers—was up 1.2 percent—or 16,272 trailers and containers.

Slowing global trade and a bloated orderbook of large vessel capacity mean that container shipping is set for another three years of overcapacity and financial pain, according to the latest Container Forecaster report published by global shipping consultancy Drewry.

The NRF is calling for 2015 holiday sales to see a 3.7 percent annual gain to $630.5 billion, which comfortably outpaces the ten-year average of 2.5 percent.


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

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA