The non-manufacturing portion of the economy should have solid growth in November 2010 according to the Institute For Supply Management survey results. The headlines:
Economic activity in the non-manufacturing sector grew in November for the 11th 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 55 percent in November, 0.7 percentage point higher than the 54.3 percent registered in October, and indicating continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index decreased 1.4 percentage points to 57 percent, reflecting growth for the 12th consecutive month but at a slower rate than in October. The New Orders Index increased 1 percentage point to 57.7 percent, and the Employment Index increased 1.8 percentage points to 52.7 percent, indicating growth in employment for the third consecutive month and the fifth time in the last seven months. The Prices Index decreased 5.1 percentage points to 63.2 percent, indicating that prices increased slower in November. According to the NMI, 10 non-manufacturing industries reported growth in November. Respondents’ comments mostly reflect cautious optimism. There is a degree of uncertainty that still remains for some industries and companies.”
Earlier this week, the ISM released the survey for manufacturing (analysis here) which concluded that the purchasing managers who are surveyed believe conditions were less good in November MoM – but still growing overall. Econintersect’s warning in that analysis is appropriate here also.
Surveys are normally completed by administrative assistants, and are colored by the personal feelings of the form fillers. ISM surveys (aka Purchasing Managers) may or may not be in the business knowledge loop in the first place.
Use surveys at your own risk, and ISM surveys are notoriously noisy.
The two most important elements are new orders (which give an indication of relative growth) and backlog (which give an indication of whether the new orders are coming in quickly enough).
The survey results for new orders showed Purchasing Managers jumping off of the fence – more jumped to a increase in new orders than jumped to a decrease in new orders. Details from the survey:
The 10 industries reporting growth of new orders in November — listed in order — are: Accommodation & Food Services; Retail Trade; Finance & Insurance; Utilities; Professional, Scientific & Technical Services; Information; Other Services; Health Care & Social Assistance; Construction; and Transportation & Warehousing. The four industries reporting contraction of new orders in November are: Management of Companies & Support Services; Wholesale Trade; Public Administration; and Educational Services.
These results are not inconsistent with anecdotal news – and a shift of Christmas retail trade into October and November.
Backlog of Orders
October’s survey results of an improvement in backlog was supported by hard data. November, the Purchasing Managers are saying the same thing. Details from the survey:
The six industries reporting an increase in order backlogs in November — listed in order — are: Utilities; Retail Trade; Information; Other Services; Finance & Insurance; and Transportation & Warehousing. The four industries reporting lower backlog of orders in November are: Management of Companies & Support Services; Wholesale Trade; Construction; and Professional, Scientific & Technical Services.
ISM Manufacturing Survey Now Less Good by Steven Hansen