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ISM Non-Manufacturing Index increased to 56.5% in November 2022
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Economic activity in the services sector grew in November for the 30th month in a row — with the Services PMI® registering 56.5 percent — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.
The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In November, the Services PMI® registered 56.5 percent, 2.1 percentage points higher than October’s reading of 54.4 percent. The Business Activity Index registered 64.7 percent, a substantial increase of 9 percentage points compared to the reading of 55.7 percent in October. The New Orders Index figure of 56 percent is 0.5 percentage point lower than the October reading of 56.5 percent.
“The Supplier Deliveries Index registered 53.8 percent, 2.4 percentage points lower than the 56.2 percent reported in October. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index was down 0.7 percentage point in November, to 70 percent. Services businesses still continue to struggle to replenish their stocks, as the Inventories Index contracted for the sixth consecutive month; the reading of 47.9 percent is up 0.7 percentage point from October’s figure of 47.2 percent. The Inventory Sentiment Index (44.2 percent, down 2.2 percentage points from October’s reading of 46.4 percent) contracted for the fourth month in a row.
“According to the Services PMI®, 13 industries reported growth. The composite index indicated growth for the 30th consecutive month after a two-month contraction in April and May 2020. Growth continues at a faster rate for the services sector, which has expanded for all but two of the last 154 months. The sector had an uptick in growth after pulling back in the previous two months. The rate of growth increased in November due to increases in business activity and employment.”
Nieves continues, “Supplier deliveries continued to slow, albeit at a slower rate in November. Based on comments from Business Survey Committee respondents, increased capacity and shorter lead times have resulted in a continued improvement in supply chain and logistics performance. A new fiscal period and the holiday season have contributed to stronger business activity and increased employment.”
INDUSTRY PERFORMANCE
The 13 services industries reporting growth in November — listed in order — are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Other Services; Construction; Health Care & Social Assistance; Public Administration; Retail Trade; Professional, Scientific & Technical Services; Accommodation & Food Services; Utilities; Transportation & Warehousing; and Educational Services. The three industries reporting a decrease in the month of November are: Management of Companies & Support Services; Wholesale Trade; and Information.
WHAT RESPONDENTS ARE SAYING
- “Business is doing well, almost back to pre-coronavirus pandemic volumes.” [Agriculture, Forestry, Fishing & Hunting]
- “Generally unchanged month over month. New business requests are solid, with costs rising steadily for materials, meals and lodging.” [Construction]
- “Still long lead times for service-related needs. A slight downturn in fuel costs in this region, but we are still experiencing supply chain shortages and delays.” [Educational Services]
- “The labor forecast has improved, which has led to our ability to increase caseload, translating to higher surgical volumes. Some medical/surgical goods categories remain constrained — Vacutainer (blood collection tubes), wound care kits, syringes, hypodermic needles — but seeing modest improvement in other categories. Despite the uptick in RSV (respiratory syncytial virus) and flu, we anticipate that business activity will remain strong through the end of 2022.” [Health Care & Social Assistance]
- “The demand for energy services remains very strong for the foreseeable future.” [Mining]
- “No change from previous months — strong RFQ activity from our customers, but we’re struggling to get electronic materials. Suppliers are still holding to lead times between eight and 12 months for simple components. We don’t see this improving in 2023.” [Other Services]
- “Job openings are seemingly continuing to decrease, but with demand for top talent still high and availability still rather scarce, the opportunity for growth is still there.” [Professional, Scientific & Technical Services]
- “Overall business is stable. Employment is low and inflation is lower than last month. Supply chain issues are stabilizing.” [Retail Trade]
- “Still struggling with recruitment, though we are starting to see more (higher quality) applicants, and (we are) hopeful the situation will quantitatively change in the first quarter of 2023. There are still struggles with longer-than-usual lead times affecting monthly delivery schedules.” [Transportation & Warehousing]
- “Local, regional and national supply constraints continue to create supply chain complexities and challenges.” [Utilities]
- “Business volume appears to be leveling out based on a month-over-month comparison, although we are up significantly when compared to the same month last year.” [Wholesale Trade]
Posted: December 5, 2022 Monday 10:00 AM