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ISM Non-Manufacturing Index dipped to 60.3% in October
Economic activity in the non-manufacturing sector grew in October for the 105th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.
The NMI® registered 60.3 percent, which is 1.3 percentage points lower than the September reading of 61.6 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 62.5 percent, 2.7 percentage points lower than the September reading of 65.2 percent, reflecting growth for the 111th consecutive month, at a slower rate in October. The New Orders Index registered 61.5 percent, 0.1 percentage point lower than the reading of 61.6 percent in September. The Employment Index decreased 2.7 percentage points in October to 59.7 percent from the September reading of 62.4 percent. The Prices Index decreased 2.5 percentage points from the September reading of 64.2 percent to 61.7 percent, indicating that prices increased in October for the 32nd consecutive month. According to the NMI®, 17 non-manufacturing industries reported growth. The non-manufacturing sector has again reflected strong growth despite a slight cooling off after a record month in September. There are continued concerns about capacity, logistics and tariffs. The respondents are positive about current business conditions and the economy.
The 17 non-manufacturing industries reporting growth in October — listed in order — are: Real Estate, Rental & Leasing; Information; Transportation & Warehousing; Utilities; Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; Construction; Health Care & Social Assistance; Management of Companies & Support Services; Wholesale Trade; Public Administration; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Mining; Finance & Insurance; Retail Trade; and Other Services. The only industry reporting a decrease in October is Educational Services.
WHAT RESPONDENTS ARE SAYING
“Tariffs are beginning to impact business. We ask our suppliers to hold pricing for six months, but we are experiencing difficulties.” (Construction)
“Wrapping up fiscal year budgets [and] seeing modest increases in volume and spend. Some price increases due to tariffs on computers/peripherals.” (Finance & Insurance)
“Stable at the moment. Still continuing to look at opportunities to reduce costs and improve efficiencies.” (Health Care & Social Assistance)
“The promotional-products trade continues to stay strong going into the end of the year. This reflects the overall macroeconomics of how the economy is doing thus far. We have not yet begun to see the impacts on prices due to the additional tariffs against China. We anticipate that price increases may start to work into the supply chain early in the first quarter.” (Management of Companies & Support Services)
“It has been very difficult to make decisions due to instability brought by the latest trading dispute. In this environment, clients tend to postpone capital-expenditure decisions.” (Mining)
“Increasing oil prices should provide an uptick in customer orders for our services in the fourth quarter. Conversely, it will likely lead to higher prices for consumables, specifically bulk chemicals and plastics. Also, hiring is becoming an issue, as finding suitable workers is more difficult as time passes.” (Professional, Scientific & Technical Services)
“September 30 was the last day of the fiscal year. To close out the year and transition to the new year, activity levels will be different from the usual. Economic growth continues to be high, especially related to construction projects. As such, construction contractors, sub-contractors and labor remain in short supply.” (Public Administration)
“Business has been strong. Continuing momentum seen in past month. Anticipating continued strong sales through remainder of the year.” (Retail Trade)
“Transportation capacity shortages remain our largest challenge.” (Wholesale Trade)
“There was a slight seasonal drop in activity as the school year commenced [because] most orders we placed and received were in the quarter preceding the school year.” (Educational Services)
Posted: November 5, 2018 Monday 10:00 AM