Subscribe to our free, weekly email newsletter!


Logistics business: ISM Non-Manufacturing Index is down but continues to show growth

image

Economic activity in the non-manufacturing sector grew in June for the sixth consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

By Jeff Berman, Group News Editor
July 06, 2010

Like its companion report, which focuses on the manufacturing sector, the Institute of Supply Management’s (ISM) June report on the non-manufacturing sector showed continued growth albeit at a reduced rate.


The ISM’s index for measuring the sector’s overall health—known as the NMI—hit 53.8 percent in June, a 1.6 percent decline from May. And like the ISM’s manufacturing index, a reading above 50 percent or higher represents growth. June marks the sixth consecutive month the NMI is more than 50 percent.

The sequential decline in the NMI carried over to other key metrics of the report, including: the Business Activity Index down 3 points to 58.1 percent; the New Orders Index down 2.7 points to 54.4 percent; the Employment Index down 0.7 percentage points to 49.7 percent; and the Prices Index down 6.8 points to 53.8 percent.

“We are still in growth mode, but it is slowing somewhat,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview.

“This is indicative of what other recent economic reports are also saying as the economy is starting to moderate. The key is we still have growth in New Orders although it is softer than the previous month. It is disappointing to see unemployment down, but that is reflective of what we are seeing elsewhere in the economy.”

Other NMI metrics that took a step back in June were Inventories, which declined by 4.0 percent to 58.5, Backlog of Orders, which fell 0.5 percent to 55.5, New Export Orders, which fell 5.5 percent to 48.0 percent, and Imports, which fell 8.5 percent to 48.0.

Nieves said the trending down of these metrics is consistent with previous summer months in that there is typically a bit of a dip in these numbers. Regarding Exports, he explained that about 70 percent of ISM NMI respondents do not perform, or do not separately measure orders for work outside of the U.S. But 30 percent, which is a strong number do, adding that the economic unrest in Europe and market declines in Asia are dinting export performance.

And with retail sales and consumer confidence data showing declines of late, Nieves said the second half of the year needs to show some sustained growth.

“We want to see sustainable growth,” said Nieves. “So even if the growth is slow and the [NMI] stays above 50 and does not contract, it is good. The economy will likely be stronger in 2011 but in 2010—as long as we stay on the path of slow, incremental, sustainable growth—we are in good shape.”

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

Following the lead of its Congressional Colleagues in the House of Representatives, the United States Senate yesterday approved a measure geared to keep federal surface transportation funding intact through the end of December with a nearly $11 billion stopgap fix.

XPO Logistics announced second quarter earnings and the acquisition of two companies, New Breed Logistics, a non asset-based 3PL focusing in contract logistics services, for roughly $615 million, and Atlantic Central Logistics, a 3PL provider of last-mile logistics services, for roughly $36.5 million.

The report, entitled “Outlook for the Domestic Transport and Logistics Market in 2H14 and Beyond,” takes the view that strong freight levels in the second quarter have left trucking companies in a good position: one in which they need to come up with new plans to handle rising demand. But even with that positive momentum afloat, the report observes that there are some familiar challenges intact, such as a lack of qualified drivers and the regulatory drag from the new hours-of-service rules that took effect in July 2013.

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

Article Topics

News · 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