Subscribe to our free, weekly email newsletter!

ISM Non-Manufacturing Index shows continued growth in October

By Jeff Berman, Group News Editor
November 03, 2010

The Institute of Supply Management’s (ISM) Non-Manufacturing Report on Business for October continued the momentum it showed in September.

The ISM’s index for measuring the sector’s overall health—known at the NMI—was 54.3 in October, a 1.1 percent gain from September. As is the case with the ISM’s Manufacturing Report on Business, a reading above 50 represents growth. October’s NMI showed growth for the 11th consecutive month, with the index above 50 over that timeframe.
The NMI’s core metrics all showed gains in October. The Business Activity/Production Index at 58.4 was up 5.6 percentage points, and New Orders at 56.7 were up 1.8 percentage points. Employment at 50.9 was up 0.7 percentage points.

“We are still seeing growth in the composite index, even though it was only up 1.1 percent,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. Business Activity came in strong, and that tells me the levels are definitely heading in the right direction. And we expect to see continued growth with New Orders, too.”

Nieves said it is likely that the NMI will display slow growth overall in the coming months, with the NMI remaining at current levels or rising slightly. He added that Employment over 50 for two straight months is a positive sign, although it is still not where it needs to be.

Until companies have what Nieves described as “real confidence” in the economy, employment data will not fully come back, he said, as many jobs that will never come back have been lost in recent years. But signs of capital investment by companies as noted in this month’s report may have the potential to increase the job count.

Even with low employment, Nieves said that glass is half-full more than half empty at this point, adding that what happens during the holiday season will be telling as far as how things stand in the non-manufacturing sector and provide a decent outlook for the future.

“As we enter the holiday season, there tends to be a pickup in activity,” said Nieves. “September is not the strongest month typically. October’s report historically has shown a little bit of an uptick heading on through January, until we see a bit of a dip with January’s post-holiday numbers, followed by an uptick as we get closer to spring.”

On the pricing side, the NMI’s Prices index at 68.3 was up 8.2 percentage points. Nieves said this gain is driven primarily by fuel prices and petroleum-based products. And despite price gains on the fuel side, there is no real pricing power overall, he said, due to a lack of overall demand. This, he explained is because of a lack of business and too much competition.

October Inventories were relatively flat at 47.5 for a 0.5 percentage point gain from September. Inventory numbers at this point are representing contraction, according to Nieves.

“What we are seeing is inventories contracting at a slower rate, so there is still inventory burn off as far as I am concerned,” noted Nieves. “Deliveries are also slowing [at 51.0, down 4.0 percentage points from September] but not as slow as in September. Companies are using inventories to fill orders and are not replacing inventory as fast as they are using it. This is something we will have to keep an eye on—as far as how confident companies are in replacing their inventories in the coming months.”

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

Kurt Nagle, president and CEO of the American Association of Port Authorities recently voiced his endorsement of this trade legislation

While many auto executives expect more industry recalls in 2015 and 2016, just 8 percent use advanced predictive analytics to help prevent, prepare for, and manage recalls, according to a recent online poll from Deloitte.

Purolator white paper highlights common Canadian shipping mistakes. From failing to appreciate the complexity of the customs clearance process to not realizing that Canada recognizes both French and English as its official languages, U.S. businesses frequently misjudge the complexity of shipping to the Canadian market. This often results in mistakes - mistakes that can come with hefty penalties and border clearance delays, and that can result in lingering negative perceptions among Canadian consumers.

At a certain point, it seems like the ongoing truck driver shortage cannot get any worse, right? Well, think again, because of myriad reasons we could well be in the very early innings of a game that is, and continues, to be hard to watch. That was made clear in a report issued by the American Trucking Associations (ATA), entitled “Truck Driver Analysis 2015.”

Coming off of 2014, which in many ways is viewed as a banner year for freight, it appears that some tailwinds have firmly kicked in, as 2015 enters its official homestretch, according to Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics (SOL) Report at last week’s CSCMP Annual Conference in San Diego. The SOL report is sponsored by Penske Logistics.


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