Subscribe to our free, weekly email newsletter!


ISM Non-manufacturing index is up slightly in July

By Jeff Berman, Group News Editor
August 03, 2012

In its Non-Manufacturing Report on Business, the Institute for Supply Management reported today that non-manufacturing activity in July increased slightly from June.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 52.6 in July, up 0.5 percent from June and down from May’s 53.7. As the NMI showed growth, its companion index in the ISM’s monthly Manufacturing Report on Business saw a 0.1 percent gain in its index—known as the PMI—to 49.8. A reading above 50 represents growth. And with the June NMI remaining above 50, economic activity in the non-manufacturing sector has grown for the last 31 months, according to ISM.

The report’s four core metrics were mixed on a sequential basis in July. Business Activity/Production was up 5.5 percent at 57.2, and New Orders were up 1.0 percent at 54.3. Employment was down 3 percent at 49.3.

“It was a nice surprise to see the NMI come in stronger month-over-month,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “Business Activity really looks strong and was not anticipated by too many people, especially when New Orders in June were at 53.3, which did not transpose into strong business activity the following month. It took us by surprise a little bit.”

The most “alarming” portion of the report, according to Nieves, was the decline in Employment.

He explained that it was indicative of what the perception—or psyche—is in the non-manufacturing sector of companies when they pull back on hiring, coupled with feelings of negativity by many regarding the economic outlook.

“It is all about the confidence level…which has been waning in the last few months based on what we have been seeing and hearing,” he said.

Supplier Deliveries in July were down 1.5 percent to 49.5, and Inventories moved up 1.5 percent to 54.5.

The slowing in deliveries spurred the inventory build up being seen in the data, according to Nieves.

Prices jumped 6.0 percent in July to 54.9. Nieves said this can be attributed to gains in different things like airfares, textile products, and petroleum-related products, which tend to have an “up and down” nature.

“It is a timing issue,” he said. “And at the end of the day price increases for oil and gas impact non-manufacturing which relies on trucking and has many remote locations.”

In looking at the economic outlook for the non-manufacturing sector, Nieves explained that the summer months tend to be slower for the sector and then picks up again in mid-September.

The current uncertain economic environment, he said, has created a faltering in confidence, and even though the ISM data is showing gradual growth, the uncertainty is still prevalent and is reflected in the sluggish employment numbers.

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

The PMI, the ISM’s index to measure growth fell 0.8 percent to 52.7 (a PMI of 50 or greater represents growth). PMI growth has been at 50 or higher for 31 straight months (with the overall economy growing for 74 months), and the current PMI is 1.7 percent below the 12-month average of 54.4.

The current status of FedEx’ planned acquisition of Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which was initially announced in April, remains in flux, with continued actions being taken by the European Commission.

Panjiva said that the 1 percent sequential growth was in line with typically flat growth from May to June, as higher monthly growth typically takes hold in July and August in advance of the holiday season.

Hackett officials described this new offering as a short-term index that offers up “the sentiment for trade at a glance,” akin to other key economic metrics like the PMI and Consumer and Carrier confidence indices, while providing access to specifically see where a group of economic indicators are in relation to trade for the current month, too.

While many industry analysts contend that distribution centers near U.S. East Coast ports will see a surge of new business after the Panama Canal expansion, real estate experts say this phenomena is already underway.

Comments

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