Subscribe to our free, weekly email newsletter!


Non-manufacturing shows decent growth in October, reports ISM

By Jeff Berman, Group News Editor
November 05, 2013

Non-manufacturing activity continued to show solid growth in October, according to the Institute for Supply Management’s (ISM) Non-Manufacturing Report on Business.

The ISM’s index to measure growth—the NMI—inched up 1.0 percent to 55.4 in October. A reading above 50 represents growth. ISM said that economic activity in the non-manufacturing sector grew in September for the 46th consecutive month.

Of the four key metrics in the report, including the NMI, three grew in October, with Business Activity/Production up 4.6 percent to 59.7 and Employment up 3.5 percent to 56.2. New Orders dipped 2.8 percent to 56.8. Even with the decline in October, New Orders have grown for 51 consecutive months, the report noted.

“The report looks very good overall, with the NMI up slightly compared to the 12-month average of 55.0,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview. “Part of the reason for that is business activity being up 4.6 percent. Even though New Orders were down, it was over 60 in August and it is still in a good place. Employment was also strong and is also a driver for October’s gains.”

The majority of ISM member respondent comments in the report were generally positive, with the government shutdown in October having, in some cases, what Nieves described as a psychological impact that did not truly show up in the report’s numbers.

Nieves said that October’s numbers are positive and provide a certain amount of confidence heading into the fourth quarter compared to a year ago at this time.

“There is still a degree of uncertainty there but not to the same extent,” he said. “Most of the uncertainty seems to lie around what the government is going to be doing in regards to healthcare reform and the overall fiscal policy. But it appears to be more solid than what we saw last year.”

Inventories in October were flat from September at 54.5, which Nieves said is in line with the non-manufacturing sector keeping a watchful eye on inventories and not wanting to be caught with too much extra stock.

“That is the prevailing practice for the sector as it is more of a demand-pull environment and less reliant on inventories having to deal with cycle times like in manufacturing,” he explained. “I don’t look at it as being anything other than inventory burn off or a concerted effort to really reduce inventory levels and not keeping it tied up on shelves which is not cost efficient. The inventory sentiment, which is indigenous to this report, is still not too high when you compare it to current business levels.”

Supplier Deliveries and Backlog of Orders were down 1.0 percent and 0.5 percent, respectively, at 49.0 and 50.0.

On a year-to-date basis through October, Nieves said non-manufacturing has been on a path of slow incremental growth that appears to be stable at this point in time.

What’s more, he said things are currently trending better for the sector than previously forecasted in the ISM’s most recent semiannual report from April.

“We have seen an uptick in revenue and will have a better idea when the December numbers come out, but we had such a small projection of business levels coming out of that forecast,” he said. “All indications when you look at strong New Orders and Business Activity will be interesting to keep an eye on.”

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

The PMI, the ISM’s index to measure growth, fell 1.4 percent to 51.5 (a PMI of 50 or greater represents growth), declining for the fifth straight month since reaching 57.9 in October 2014. And it is 4 percent below the 12-month average of 55.5. The March PMI is at its lowest level since May 2013’s 50.1.

How the food giants integrate supply chain operations is one of the most interesting components of the recently-announced merger between H.J. Heinz Co. and The Kraft Foods Group.

The new online offering is entitled “Vessels at a Glance” and is comprised of a daily update that shows all vessels at berth and anchor within POLB, as well as the Port of Los Angeles (POLA). It also includes information relating to vessel arrival and departure dates and length of stay in Long Beach, too, along with weekly updated charts that show the number of vessels at anchor at POLB and POLA that POLB officials said illustrate trends occurring over the last six months.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in January dropped 1.2 percent to $89.3 billion.

Download our new white paper, "The ABCs of HST: Understanding the Harmonized System of Tariffs," for insights and explanations of the complex cross-border classification codes.

Article Topics

News · ISM · NMI · All topics

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA