Research >> Economics
ISM Non-Manufacturing Index increased to 57.8% in September
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Economic activity in the services sector grew in September for the fourth month in a row, 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: “The Services PMI™ registered 57.8 percent, 0.9 percentage point higher than the August reading of 56.9 percent. This reading represents growth in the services sector for the fourth straight month and the 126th time in the last 128 months, except for April’s and May’s contraction.
“The Supplier Deliveries Index registered 54.9 percent, down 5.6 percentage points from August’s reading of 60.5 percent. (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 figure of 59 percent is 5.2 percentage points lower than the August reading of 64.2 percent, indicating that prices increased in September at a slower rate. According to the Services PMI™, 16 services industries reported growth. The composite index indicated growth for the fourth consecutive month after contraction in April and May. Respondents’ comments remain mostly optimistic about business conditions and the economy, which correlates directly to those businesses that are operating. There continues to be capacity and logistics issues, as business volumes have increased,” says Nieves.
INDUSTRY PERFORMANCE
The 16 services industries reporting growth in September — listed in order — are: Arts, Entertainment & Recreation; Utilities; Management of Companies & Support Services; Transportation & Warehousing; Health Care & Social Assistance; Wholesale Trade; Real Estate, Rental & Leasing; Accommodation & Food Services; Construction; Public Administration; Educational Services; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Retail Trade; Information; and Other Services. The only industry reporting a decrease in September is Professional, Scientific & Technical Services.
WHAT RESPONDENTS ARE SAYING
- “Business has been fairly stable over the summer; however, there is still a great deal of uncertainty as we move into fall and winter [and] how our sales volume will be.” (Agriculture, Forestry, Fishing & Hunting)
- “Our industry is facing a bleak outlook, as the Hollywood studios have pulled back almost all of their content from October and November and moved it into next year. Coupled with the state health mandates restricting our attendance, we expect to operate at a loss in 2020 and 2021.” (Arts, Entertainment & Recreation)
- “Work orders are improving rapidly. Lack of available labor is having a significant impact on our ability to fulfill orders.” (Construction)
- “As a public state university, our economic forecast is dependent upon our campus remaining open and students on campus. Currently, our students are on campus, but we have a reduced footprint with a 25-percent decrease in students living in university-provided housing. Enrollment was down 2 percent and most attribute that to COVID-19. Many students choose to stay close to home and attend classes at their local university or community college. Overall, our revenue will be down slightly this year, as long as our campus remains open. If we have to send students home due to a COVID-19 outbreak, then we will experience a drastic reduction in our revenue.” (Educational Services)
- “Insurance industry will experience some impact from weather- and protest-related property damage and business interruption.” (Finance & Insurance)
- “Elective procedures remain at near-historic levels, even with periodic and small [coronavirus] spikes within the region. Our organization is rolling back and approving some — not all — of the capital projects previously approved for this year and starting to regroup and plan/budget for 2021. We continue to have furloughed staff in more administrative roles than clinical, and shared services staff that are working well in the alternative work environments will not return until (at the earliest) mid next year. Our productivity remains high, possibly higher, than when we are in our offices, at least for shared-services roles that are having no information technology [IT] issues. We are starting to see an increase in backorders and rejections from our main vendors. End-of-year typically brings more discontinuations and catalog consolidations from vendors, and on top of COVID-19 product issues, resources are being stretched further again.” (Health Care & Social Assistance)
- “Activity level is holding steady, with optimistic outlook.” (Mining)
- “Customer confidence creeping back as a belief in the end, or perhaps taming, of COVID-19 increases; however, it comes with a high degree of caution regarding uncertainty in the marketplace and a reluctance to commit. Exploratory conversations are increasing, but hard orders are not.” (Professional, Scientific & Technical Services)
- “Business has come back solidly since mid-July, with a strong August and September. However, suppliers are plagued with lead-time challenges driven by (1) cautionary practices in terms of rebuilding capacity, (2) hiring difficulties for those trying to build capacity and (3) the impact of recent hurricanes in - “Very good sales trend in home-improvement product sales, but challenges on market conditions exist like limited ocean capacity from Asia to U.S., delays in port and rails as a result of COVID-19 pandemic impact.” (Wholesale Trade)
Posted: October 5, 2020 Monday 10:00 AM