ISM non-manufacturing data remains in positive territory in November

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Despite seeing sequential declines for its key metrics, non-manufacturing activity again showed growth in November, according to the Institute for Supply Management’s (ISM) Non-Manufacturing Report on Business.

The ISM’s index to measure growth—the NMI—dropped 1.5 percent to 53.9 in November. A reading above 50 represents growth. ISM said that economic activity in the non-manufacturing sector grew in October for the 47th consecutive month. The November NMI is slightly below the 12-month average of 54.9.

Of the four key metrics in the report, including the NMI, all were down in November, with Business Activity/Production down 4.2 percent to 55.5 while growing for the 52nd straight month and Employment was down 3.7 percent to 52.5. New Orders were off only slightly, falling 0.4 percent to 56.4 while showing growth for 52 straight months.

“Looking at the four key metrics that make up the NMI, things are generally still strong in the non-manufacturing sector,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “New Orders were only down a little bit and Business Activity/Production has come off a bit, but it could be a reflection of cycle time gearing up. Employment is a cycle time issue as companies gear up for meeting their capacity heading into the holidays so they don’t have to go through the indoctrination of hiring and training and related things.”

Nieves said ISM did not anticipate Employment staying at its October level, which was especially strong.

Supplier Deliveries inched up 2.0 percent to 51.0, with a reading above 50 percent indicating slower deliveries, and a reading below 50 percent indicating faster deliveries. Inventories were off 0.5 percent to 54.0, and Prices dropped 3.9 percent to 52.2. Backlog of Orders was down 1.0 percent to 49.0.

“Overall, when looking at the comments [from ISM member respondents] in the report in conjunction with the data, there is a degree of optimism in it, while there will always be some level of uncertainty, too, with things like government policy issues, among others,” noted Nieves. “The prevailing mood of our respondents is one of optimism right now. There is also a little bit of a loosening of consumer purse strings occurring as well as it relates to overall confidence.”

Looking ahead, Nieves said December is likely to be in the same range as November, based on New Orders remaining relatively strong. In a worst-case scenario, he said New Orders could be “sideways,” but is expecting an uptick.

 

 


About the Author

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. Contact Jeff Berman

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