Sunday, September 5, 2010

USA Non-Manufacturing Index (NMI) Contracts -2.8% in August (Chart)


USA Non-Manufacturing Index (NMI) Decreases for Second Time in 2010

USA Non-Manufacturing Index (NMI) Contracts -2.8% in August

The Non-Manufacturing Index (NMI) of the Institute for Supply Management (ISM) decreased -2.8% to 51.5 in August. This was the second monthly decrease (June was -1.6%) since the March, April, May 2010 peaks of 55.4. The -2.8% decrease was also the largest in the past 12 months.

The ISM statement about the August 2010 NMI: "In August, the NMI registered 51.5 percent, indicating continued growth in the non-manufacturing sector for the eighth consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting."

Below is a chart of the latest 13 months of the Non-Manufacturing Index (NMI) of the Institute for Supply Management (ISM), from August 2009 through the latest month reported, August 2010. The NMI has been greater than 50, indicating USA manufacturing is expanding, since January 2010 - 8 consecutive months. As can be seen, the NMI was lowest, on this chart, in August 2009, at 48.2, and then ascended significantly to March 2010 at 55.4. The NMI then stayed at this level through April and May before descending. However, the monthly declines in June and August still indicate USA manufacturing is expanding - just at a slower pace.

The 12-month (1 year) moving average of the NMI is 52.3, which the August value is below at 51.5. The NMI is a percentage - not a total. More about the NMI below the chart.

USA Non-Manufacturing (NMI) Declines to 51.5 in August

*Data courtesy of the Institute for Supply Management*

About The NMI

The ISM describes the NMI, the USA non-manufacturing metric:

Level of the NMI A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. An NMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy

NMI Components The NMI is a composite of five indexes: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. 17 non-manufacturing industries are reported and represented in the NMI index: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Information; Other Services; Transportation & Warehousing; Public Administration; Mining; Health Care & Social Assistance; Educational Services; Wholesale Trade, Construction; Utilities; Accommodation & Food Services; and Finance & Insurance.

Non-Manufacturing Sector Plays a Significant Role in Economy The non-manufacturing sector currently makes up more than 80 percent of the gross domestic product (GDP). In addition to purchasing materials for production, manufacturing businesses also source for services from various non-manufacturing industries. Virtually every business is impacted by business activity in the non-manufacturing sector.

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