Non-manufacturing activity in February hits highest level in a year, says ISM

The Institute for Supply Management (ISM) reported today that non-manufacturing activity in February hit its highest level in a year, with non-manufacturing activity growing for the 38th consecutive month.

By ·

The Institute for Supply Management (ISM) reported today that non-manufacturing activity in February hit its highest level in a year, with non-manufacturing activity growing for the 38th consecutive month.

In its monthly Non-Manufacturing Report on Business, the ISM reported that the index it uses to measure non-manufacturing growth—known as the NMI—was 56.0 in February, up 0.8 percent from January and above the 12-month average of 54.5. What’s more, the ISM said this is the highest NMI since hitting 57.3 in February 2012.

A reading above 50 represents growth. The PMI, the index on which the ISM’s Manufacturing Report on Business is based on, rose 1.1 percent to 54.2 in February.

The report’s four core metrics each remained in growth mode in February. Business Activity/Production was up 0.5 percent at 56.9, and New Orders were up 3.8 percent at 58.2, and Employment fell 0.3 percent at 57.2 but remained firmly in growth territory.

“The key metrics all were in the right place,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, said in an interview.

February Supplier Deliveries—at 51.5—were 1.0 percent below January, with Inventories up 7.0 percent at 54.0. Prices, which have been mainly been driven by gains in petroleum and petroleum-based products, saw a 3.7 percent rise to 61.7. And Backlog of Order increased 5.5 percent to 54.5.

Nieves said the “perfect scenario” would be for Backlog of Orders to grow, coupled with Supplier Deliveries slowing, with other indices increasing.

“The theme of the day in the past and currently was how companies are doing more with less so therefore with order backlog and new orders up and employment on a positive trend, there does need to be a bigger gap between new orders and employment, because now there is very little separating the two,” he said. “In order for employment to stand on its own longer, there needs to be a larger gap there. The ideal scenario would be for employment to have an upward trend into the high 50s’/low 60s, with new orders in the low 60s. That would be sustainable.”

Comments in the report from ISM member respondents showed increasing signs of confidence in the economy.

A wholesale trade respondent pointed to February bouncing back to forecast levels, and a public administration respondent cited how the economy is picking up at a faster pace than previously projected.

“I think we are on the right track, but I like to see things trend out for a period of time,” explained Nieves. “As we approach the end of the first quarter, things are boding well so far. It is better than anticipated. I have said before that February and March are pivotal months as we get past the lull of post-holiday and get into the swing of things and get a better idea of how things are starting to look heading into summer.”


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

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!

Latest Whitepaper
SaaS Supply Chain Management Systems
A guide to better understanding the market, the software and the benefits
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Digital Evolution: Streamlining Logistics and Supply Chain Operations
In this FREE virtual conference we'll define the challenges facing operations and offer solutions designed to create dynamic, automated networks that offer seamless communication, improved collaborative third-party relationships, and the ability to respond to changes at a moment's notice.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...