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

Matson, Inc., a leading U.S. carrier in the Pacific, is moving quickly to fund improvements in its new Alaska operations following its May 29 acquisition of Horizon Lines' Alaska services.

Josh Green, CEO of Panjiva, an online search engine with detailed information on global suppliers and manufacturers, said despite the recent trends coming out of China, it is important to remember is that on a big picture level, its impact on the global economy is big and growing.

Diesel gasoline’s average price per gallon dropped for the ninth week in a row, according to data issued by the Department of Energy’s Energy Information Administration (EIA) this week.

Citing currency exchange rates and lower fuel surcharges, second quarter revenue for transportation and logistics titan UPS dropped 1.2 percent to $14.1 billion, the Atlanta-based company reported today. Even though revenue was slightly down, earnings per share saw a 12 percent annual gain at $1.35, which was above Wall Street estimates of $1.27.

Does your organization struggle with the integration of information between your internal systems, processes and partner portals? You're not alone! Kapow Software alongside EFT has surveyed over 200 organizations regarding the importance of information access, visibility and discusses some of the major goals for supply chain and logistics organizations.

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