Monday, October 11, 2010

USA Non-Manufacturing Index (NMI) Up +1.7% in September (Chart) "Continued growth at faster rate"


USA Non-Manufacturing Index (NMI) Grew for 9th Consecutive Month

USA Non-Manufacturing Index (NMI) Up +1.7% in September

Official Statement "(Tempe, Arizona) - Economic activity in the non-manufacturing sector grew in September for the ninth consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®. The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 53.2 percent in September, 1.7 percentage points higher than the 51.5 percent registered in August, indicating continued growth in the non-manufacturing sector at a faster rate."

Short-Term Cycle History The current ISM NMI is up +5.0 and +10.4% from the recent low of 48.2 in August 2009. The NMI is down -2.2 and -4.0% from the recent high of 55.4 in March, April, and May 2010. The NMI is a percentage - not a total. More about the NMI below the chart.

Trend The NMI had been trending downwards after the 3-month peak and the current NMI is a bounce off the bottom. The NMI has been greater than 50, indicating USA non-manufacturing is expanding, since January 2010 - 9 consecutive months. The current NMI of 53.2 is above the 12-month moving average of 52.6.

Non-Manufacturing Index (Chart) Below is a chart of the latest 14 months of the Non-Manufacturing Index (NMI) of the Institute for Supply Management (ISM) from August 2009 through the latest month reported, September 2010. As can be seen, the NMI was lowest, on this chart, in August 2009, at 48.2, and then ascended significantly to March 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.


This is encouraging data as the trend had been downwards and now there has been a bounce off the bottom in September. Also encouraging is the 9 consecutive months of expansion and now the rate of increase has increased. However, the related  ISM Manufacturing PMI is still in at least a short-term downwards trend, though still expanding, and is reviewed here (USA Manufacturing PMI Contracts in September -1.9% (Chart) *10 month low, growing at slower rate*).

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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*Data courtesy of the Institute for Supply Management*

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