ISM Non-Manufacturing Index shows growth in April

The ISM’s index for measuring the sector’s overall health—known as the NMI—was 52.8 in April, 4.5 percentage points lower than March's 57.3. Even with the sequential decline, a reading above 50 represents growth.

By ·

Like its companion report, which focuses on manufacturing, the Institute for Supply Management’s (ISM) Non-Manufacturing Report on Business showed positive growth for the 17th straight month in April.

The ISM’s index for measuring the sector’s overall health—known as the NMI—was 52.8 in April, 4.5 percentage points lower than March’s 57.3.  Even with the sequential decline, a reading above 50 represents growth.

The NMI’s total reading is largely based on four core metrics. In April, they were all off from March levels, with Business Activity/Production down 6.0 percent at 53.7, New Orders off 11.4 percent at 52.7, and Employment falling 1.8 percent to 51.9.

“The report is pulled back, and we have had some slowing of growth here but it still beats contraction,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “We experienced very strong growth during the first quarter, but we are seeing a moderation of that growth with rising prices, cost pressures, and a bit of a wane in company and consumer confidence and the employment index all pulling it back a little bit.”

Overall, Nieves said that the strong performance in the first quarter, which had unanticipated strength, was at first thought to be sustainable, but to keep that pace intact would have been difficult, given the jobs outlook and increasing prices.

April Inventories were flat compared to March at 55.5, and Prices were down 2.0 percent at 70.1. Backlog of Orders were down 0.5 percent at 55.5.

While these metrics show how April and March were very comparable, how things play out with the NMI in the coming months remain to be seen. If prices continue to increase, Nieves said consumers are extremely likely to be more reserved in how they spend money, adding they will use more discretion when making investments.

“It depends on the specific industry within the non-manufacturing sector,” he said. “We typically see a little bit of dip in the report around the July-August timeframe, and it then starts picking up in the latter part of September and October again. It will be interesting to see because of all the different dynamics we have experienced over the last three years where exactly things go with the report this summer. What we do see is strength in traction in the latter part of the spring historically in non-manufacturing, and I think that is part of the anticipation of what is expected in the summer as a lead-in compared to what is actually happening at that point in time.”

For related articles click here.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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!

Article Topics

All Topics
Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....