Boom Doom Economy: USA Non-Manufacturing Index (NMI) Up +1.1% in October (Chart) *Continued growth for 10 consecutive months*

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USA Non-Manufacturing Index (NMI) Grew for 10th Consecutive Month

USA Non-Manufacturing Index (NMI) Up +1.1% in October

Official Statement (Tempe, Arizona) - "Economic activity in the non-manufacturing sector grew in October for the 10th 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 54.3 percent in October, 1.1 percentage points higher than the 53.2 percent registered in September, and indicating continued growth in the non-manufacturing sector at a slightly faster rate."

Industry Performance (Based on the NMI) "The 11 industries reporting growth in October based on the NMI composite index — listed in order — are: Educational Services; Mining; Professional, Scientific & Technical Services; Information; Finance & Insurance; Wholesale Trade; Health Care & Social Assistance; Accommodation & Food Services; Management of Companies & Support Services; Retail Trade; and Public Administration. The three industries reporting contraction in October are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; and Construction."

Short-Term Cycle History The current ISM NMI is up +6.1 and +12.7% from the recent low of 48.2 in August 2009. The NMI is now down just -1.1 and -2% 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 in March, April, and May 2010. Now the NMI has bounced up from the August low and increased 2 consecutive months. The NMI has been greater than 50, indicating USA non-manufacturing is expanding, since January 2010, for 10 consecutive months. The current NMI of 54.3 is above the 12-month moving average of 52.9.

Non-Manufacturing Index (Chart) Below is a chart of the latest 15 months of the Non-Manufacturing Index (NMI) of the Institute for Supply Management (ISM) from August 2009 through the latest month reported, October 2010. As can be seen, the NMI was lowest, on this chart, in August 2009, at 48.2, and then ascended significantly to the cyclical peak in March at 55.4. The NMI then stayed at this level through April and May before descending.

Commentary This is another month of encouraging data as the trend is now upwards and signals continued expansion in USA non-manufacturing. Also encouraging is the 10 consecutive months of gains and now the rate of increase is increasing. The related ISM Manufacturing PMI is also encouraging for October, expanding, and is reviewed here (USA Manufacturing PMI Increases in October, at 5-Month High (Chart) *Signals continuation of economic recovery*)

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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