Subscribe to our free, weekly email newsletter!


ISM reports non-manufacturing growth remains intact in April

By Jeff Berman, Group News Editor
May 05, 2014

The Institute for Supply Management (ISM) reported today in its Non-Manufacturing Report on Business that non-manufacturing activity remained on a solid trajectory in April.

The NMI, the ISM’s index to measure growth, headed up 2.1 percent in April to 55.2 for its highest level since August 2013. A reading above 50 represents growth. April’s NMI is 0.9 percent of the 12-month average of 54.3 and represents the 51st consecutive month of growth in the non-manufacturing sector.

Three of the report’s four key metrics, including the NMI, were up in April. Business Activity/Production saw a 7.5 percent gain to 60.9, and New Orders were up 4.8 percent to 58.2. Employment dropped 2.3 percent to 51.3, following March’s 6.1 percent gain to 53.6, which stands as the largest month-over-month increase since the inception of Non-Manufacturing Report on Business in January 1998.

“Looking at the data in the report and comments from respondents within it, there is a feeling that business conditions in the economy are definitely improving,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “Respondents indicated a pick up in sales due to a break in the weather, with business levels stable, and steady market conditions with outlooks on target. Things are starting to look better, and it is reflected in the numbers. The two drivers here are business activity/production and new orders.”

The drop in employment is a bit of a lag on the NMI, explained Nieves, but he pointed it is still growing month-over-month, although at a slower, incremental pace.

April supplier deliveries saw a 1.5 percent difference from March at 50.5. with deliveries above 50 indicating a slower pace, and inventories were up 7.5 percent at 55.5.

Even with a slowdown in supplier deliveries, Nieves said that is not a major concern, as there are enough product and services in the pipeline to keep business levels strong as activity increases. When that happens inventory is withdrawn and subsequently replenished, as was the case with the 7.5 percent gain in April. 

Backlog of orders dipped 2.5 percent in April to 49.0. Even though there was a decline, Nieves said companies were fortunate there were enough products and services flowing to prevent a true lack of growth in order backlog.

“In a perfect word, we want to see backlog growing,” said Nieves. “We want to see inventories in a steady growth pattern without being excessive. If we are seeing backlog, it reflects a good picture of the economy, with growth in demand at a level where economic conditions are improving.”

On a year-to-date basis, Nieves said that even as the year began a little slow there is now decent momentum, even though it remains to be seen if it turns out to be steady, incremental growth or something stronger.

“As much as conditions have improved month over month, these numbers show a good uptick and point to a steady, sustainable growth path in the coming months,” he said.

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

Intermodal units, at 278,767 containers and trailers were up 6.7 percent compared to the same week last year and marks the third best week for intermodal ever recorded based on AAR’s data.

LM Group News Editor Jeff Berman recently conducted a wide-ranging interview with Bobby Harris, President and CEO of non asset-based 3PL BlueGrace Logistics about various aspects of the freight transportation market.

It’s small, but senior brass at YRC Worldwide will take it. After nearly seven years of continuing losses in excess of $2.6 billion, the parent of the nation’s second-largest LTL carrier posted a narrow net profit in the third quarter ended Sept. 30.

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Article Topics

News · ISM · NMI · All topics

Comments

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


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA