Boom Doom Economy: USA Services Sector Growth at 66-Month High! (Chart) *Non-Manufacturing Index expands for 14th month*

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USA Non-Manufacturing Index (NMI) by the Institute for Supply Management

USA Non-Manufacturing Index (NMI) at 66-Month High!

Official Statement by the Institute for Supply Management (Tempe, Arizona) - Economic activity in the non-manufacturing sector grew in January for the 14th 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. "The NMI (Non-Manufacturing Index) registered 59.4 percent in January, 2.3 percentage points higher than the seasonally adjusted 57.1 percent registered in December (the seasonal adjustment did not change the reading that was originally reported), and indicating continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 1.7 percentage points to 64.6 percent, reflecting growth for the 18th consecutive month and at a faster rate than in December. The New Orders Index increased 3.5 percentage points to 64.9 percent, and the Employment Index increased 1.9 percentage points to 54.5 percent, indicating growth in employment for the fifth consecutive month and at a faster rate. The Prices Index increased 2.6 percentage points to 72.1 percent, indicating that prices increased at a faster rate in January. According to the NMI, 13 non-manufacturing industries reported growth in January. Respondents' comments are mostly positive about business conditions; however, they still remain cautious about the sustainability."

Industry Performance (Based on the NMI) "The 13 industries reporting growth in January based on the NMI composite index — listed in order — are: Mining; Real Estate, Rental & Leasing; Utilities; Transportation & Warehousing; Management of Companies & Support Services; Finance & Insurance; Information; Accommodation & Food Services; Wholesale Trade; Retail Trade; Construction; Other Services; and Health Care & Social Assistance. The five industries reporting contraction in January are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Educational Services; Professional, Scientific & Technical Services; and Public Administration."

Cycle History The current ISM NMI is at a post-Great Recession cyclical high of 59.4, up +22.2 and +60% from the Great Recession cyclical low of 37.2 in November 2008, and the highest since August 2005. The NMI is a percentage - not a total. More about the NMI below the chart.

Trend The NMI continues a strong uptrend indicating increasing expansion and is at a post-Great Recession peak. The NMI has been greater than 50, indicating USA non-manufacturing, services, is expanding, since January 2010, for 13 consecutive months. The current NMI is above the steeply ascending 12-month moving average of 54.8 (The 12-month moving average chart is not shown on this page).

Non-Manufacturing Index (Chart) Below is a chart of the latest 18 months of the Non-Manufacturing Index (NMI) of the Institute for Supply Management (ISM) from August 2009 through the latest month reported, December 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 May 2010 at 54.8. The NMI then reached a short term low in August 2010 of 52.8. The NMI has increased in each of the subsequent 5 months and continues at a post-Great Recession cyclical peak.

Commentary The PMI was revised for several months of 2010, so the above commentary and monthly data changed somewhat from previous monthly posts. This is yet another month of encouraging data as the upward trend signals continued expansion in the USA non-manufacturing (services) sector. The +2.3% jump from December is a large increase and expansion. Also encouraging is the 14 consecutive months of gains and the rate of increase is increasing for the 5th consecutive month. The related ISM Manufacturing PMI for the USA also increased in January, at an 80-month high, is expanding, and is reviewed here [USA Manufacturing PMI at 80-Month High! (Chart) *Economy expanded for 20th month*].

About The NMI

Level of the NMI The NMI is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the non-manufacturing economy in that index is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

NMI Components The Non-Manufacturing ISM Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Non-Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Non-Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).

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

About the Institute for Supply Management The Institute for Supply Management™, established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education.

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