- THE MAGAZINE
Economic activity in the non-manufacturing sector grew in August for the 44th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.
The Institute for Supply Management noted non-manufacturing industries expanded at a much quicker pace in August. This was the second consecutive month of sharp gains, said ISM. The index is now up 6.4 points since June and sits at its highest level since January 2008, reported Erik Johnson, senior U.S. economist for IHS Global Insight.
After the rate of expansion slowed in the second quarter, the past two months have been strong across the board, Johnson reported in August. New orders and business activity have each gone from near-neutrality (50.8 and 51.7, respectively) to sharp acceleration (60.5 and 62.2), while the employment index hit a six-month high in August.
The latest ISM reports make clear that the slowdown that began in March and plagued both manufacturing and non-manufacturing industries has abated. This is consistent with our view that GDP growth will continue to accelerate, albeit slowly, after a likely third-quarter dip, said Johnson.
The report was issued by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee.
"The NMI registered 58.6 percent in August, 2.6 percentage points higher than the 56 percent registered in July. This indicates continued growth at a faster rate in the non-manufacturing sector. This month's NMI is the highest reading for the index since its inception in January 2008. The Non-Manufacturing Business Activity Index increased to 62.2 percent, which is 1.8 percentage points higher than the 60.4 percent reported in July, reflecting growth for the 49th consecutive month. The New Orders Index increased by 2.8 percentage points to 60.5 percent, and the Employment Index increased 3.8 percentage points to 57 percent, indicating growth in employment for the 13th consecutive month.
"The Prices Index decreased 6.7 percentage points to 53.4 percent, indicating prices increased at a significantly slower rate in August when compared to July. According to the NMI, 16 non-manufacturing industries reported growth in August. The majority of respondents' comments continue to be mostly positive about business conditions and the direction of the overall economy."
The 16 non-manufacturing industries reporting growth in August — listed in order — are: Educational Services; Management of Companies & Support Services; Information; Accommodation & Food Services; Public Administration; Construction; Finance & Insurance; Professional, Scientific & Technical Services; Retail Trade; Utilities; Transportation & Warehousing; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Other Services; Wholesale Trade; and Health Care & Social Assistance. The two industries reporting contraction in August are: Mining; and Arts, Entertainment & Recreation.
WHAT RESPONDENTS ARE SAYING ...
- "High demand for products is driving expansion." (Management of Companies & Support Services)
- "We continue to see growth in the retail and wholesale sectors of our business, and expect to see new orders for our products continue to grow as well." (Information)
- "We seem to have a flurry of activity in our pipeline." (Construction)
- "Business orders are up and improving. Still concerned about sustainability through Q4." (Professional, Scientific & Technical Services)
- "Experiencing a strong housing rebound and continued solid performance by the tourism sector." (Public Administration)
- "Conditions continue to show improvement." (Retail Trade)
"Generally slow, increasing economy." (Transportation & Warehousing)