September 2017 Non-Manufacturing ISM Report On Business
Economic activity in the non-manufacturing sector grew in September for the 93rd consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM(R) Report On Business(R).
The report was issued today by
INDUSTRY PERFORMANCE
The 15 non-manufacturing industries reporting growth in September -- listed in order -- are: Retail Trade; Other Services; Management of Companies & Support Services; Information; Utilities; Transportation & Warehousing; Real Estate, Rental & Leasing; Wholesale Trade; Construction; Professional, Scientific & Technical Services; Finance & Insurance; Health Care & Social Assistance;
WHAT RESPONDENTS ARE SAYING ...
* "Hurricane Irma caused a revenue challenge that will take some time to recover from, interrupting business operations in that region and offsetting growth in others." (Accommodation & Food Services)
* "Our business continues to grow at a good pace." (Health Care & Social Assistance)
* "General outlook looking up, with sales picking up. That will drive spend and investment." (Information)
* "Overall, consistent growth in construction/office renovation jobs. Eight percent more jobs and 6 percent more revenue." (Construction)
* "Positive business trends continue in second half. Business results above plan and higher year-to-year. Forecast above planned results for 2017." (Finance & Insurance)
* "Business still in a down trend due to lack of capital investment in worldwide mining market." (Mining)
* "Hurricane Harvey has been a disruption to normal business activity in the oil and gas industry. Refineries and petrochemical plants were shut down due to the storm, as were many offices along the
* "Continued growth; however, slower pace than in past. Expecting some further disruptions due to weather in
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
* Non-Manufacturing ISM(R) Report On Business(R) data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM(R) Report On Business(R) data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.
** Number of months moving in current direction.
COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN
Commodities Up in Price
Aluminum; Cheese; Copper Fittings; Copper Pipe; Copper Products (2); Corrugated Boxes (5); #1 Diesel Fuel (4); #2 Diesel Fuel (2); Fuel (3); Gasoline (2); Labor (6); Labor -- Construction (7);
Commodities Down in Price
Bacon; Beef; and Beef Products (2).
Commodities in Short Supply
#1 Diesel Fuel; #2 Diesel Fuel; Electronic Parts; IV Solutions (2); Labor (2); Labor -- Construction (18); Labor -- Temporary;
Note: The number of consecutive months the commodity is listed is indicated after each item.
NMI(R)
In September, the NMI(R) registered 59.8 percent, 4.5 percentage points higher than the 55.3 percent registered in August, indicating continued growth in the non-manufacturing sector for the 93rd consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.
An NMI(R) above 48.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the September NMI(R) indicates growth for the 98th consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 93rd consecutive month. Nieves says, "The past relationship between the NMI(R) and the overall economy indicates that the NMI(R) for September (59.8 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis."
NMI(R) HISTORY
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Business Activity
ISM(R)'s Business Activity Index registered 61.3 percent in September, an increase of 3.8 percentage points from the August reading of 57.5 percent. This represents growth in business activity for the 98th consecutive month. Fourteen industries reported increased business activity and three industries reported decreased activity for the month of September. Comments from respondents include: "New business gained" and "Entering our peak in the third quarter."
The 14 industries reporting growth of business activity in September -- listed in order -- are: Utilities; Retail Trade; Information; Other Services; Management of Companies & Support Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Construction; Accommodation & Food Services; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
New Orders
ISM(R)'s Non-Manufacturing New Orders Index registered 63 percent, an increase of 5.9 percentage points from the August reading of 57.1 percent. September represents growth in new orders for the 98th consecutive month, at a faster rate compared with August. Comments from respondents include: "New customers who we contracted early in the year have completed the onboarding process and are coming online" and "New product launch."
The 15 industries reporting growth of new orders in September -- listed in order -- are: Retail Trade; Utilities; Information; Other Services; Transportation & Warehousing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Finance & Insurance; Educational Services;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Employment
Employment activity in the non-manufacturing sector grew in September for the 43rd consecutive month. ISM(R)'s Non-Manufacturing Employment Index registered 56.8 percent, which reflects an increase of 0.6 percentage point when compared to the August reading of 56.2 percent. Ten industries reported increased employment, and five industries reported decreased employment. Comments from respondents include: "Adding staff to address workload" and "Capacity and need."
The 10 industries reporting an increase in employment in September -- listed in order -- are: Real Estate, Rental &Leasing; Other Services; Wholesale Trade; Retail Trade; Finance & Insurance; Management of Companies & Support Services; Mining; Transportation & Warehousing; Health Care & Social Assistance; and Construction. The five industries reporting a reduction in employment in September are: Arts,
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Supplier Deliveries
Supplier deliveries were slower in September for the 21st consecutive month. The index registered 58 percent, which is 7.5 percentage points higher than the 50.5 percent that was registered in August. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Weather conditions impacted the supplier deliveries" and "Suppliers not responding to increased demand."
The 13 industries reporting slower deliveries in September -- listed in order -- are: Management of Companies & Support Services; Transportation & Warehousing; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Educational Services; Professional, Scientific & Technical Services; Construction; Mining; Retail Trade;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Inventories
ISM(R)'s Non-Manufacturing Inventories Index grew in September for the sixth consecutive month and registered 51.5 percent, 2 percentage points lower than the 53.5 percent that was reported in August. Of the total respondents in September, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Consumed some inventory due to hurricane recovery" and "Unexpected higher volume of activity."
The six industries reporting an increase in inventories in September -- listed in order -- are: Other Services; Utilities; Professional, Scientific & Technical Services; Construction; Wholesale Trade; and Health Care & Social Assistance. The five industries reporting decreases in inventories in September are: Arts,
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased substantially in September and also increased for the fourth consecutive month. ISM(R)'s Non-Manufacturing Prices Index registered 66.3 percent, 8.4 percentage points higher than the 57.9 percent reported in August. Thirty-one percent of respondents reported higher prices, 65 percent indicated no change in prices paid, and 4 percent of respondents reported lower prices.
The 16 non-manufacturing industries reporting an increase in prices paid during the month of September -- listed in order -- are: Management of Companies & Support Services; Wholesale Trade; Construction;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.
Backlog of Orders
ISM(R)'s Non-Manufacturing Backlog of Orders Index indicates that order backlogs grew in September. The index registered 56 percent, which is 2.5 percentage points higher than the 53.5 percent reported in August. Of the total respondents in September, 30 percent indicated they do not measure backlog of orders.
The eight industries reporting an increase in order backlogs in September -- listed in order -- are: Management of Companies & Support Services; Retail Trade; Health Care & Social Assistance; Information; Utilities; Finance & Insurance;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the
The eight industries reporting an increase in new export orders in September -- listed in order -- are: Retail Trade;
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Imports
Imports grew in September for the fourth consecutive month. This month's reading at 52 percent is 1.5 percentage points higher than the reading of 50.5 percent reported in August. Fifty-three percent of respondents reported that they do not use, or do not track the use of, imported materials.
The four industries reporting an increase in imports for the month of September are: Retail Trade; Other Services; Information; and Construction. The three industries reporting a decrease in imports in the month of September are: Health Care & Social Assistance; Accommodation & Food Services; and Professional, Scientific & Technical Services. Ten industries reported no change in imports in September compared to August.
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
Inventory Sentiment
The ISM(R) Non-Manufacturing Inventory Sentiment Index in September registered 58.5 percent, which is 2.5 percentage points lower than the reading of 61 percent reported in August. This indicates that respondents believe their inventories are still too high at this time. In September, 24 percent of respondents said their inventories were too high, 7 percent of the respondents said their inventories were too low, and 69 percent said their inventories were about right.
The seven industries reporting a feeling that their inventories are too high in September -- listed in order -- are: Mining; Utilities; Construction; Wholesale Trade; Accommodation & Food Services; Finance & Insurance; and
See table here (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30919)
About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire
The data presented herein is obtained from a survey of non-manufacturing supply executives based on information they have collected within their respective organizations. ISM(R) makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
The Non-Manufacturing ISM(R) Report On Business(R) 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,
Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response, and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.
The NMI(R) (Non-Manufacturing Index) 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 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.
An NMI(R) above 48.9 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.9 percent, it is generally declining. The distance from 50 percent or 48.9 percent is indicative of the strength of the expansion or decline.
The Non-Manufacturing ISM(R) Report On Business(R) survey is sent out to Non-Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM(R) receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM(R) then compiles the report for release on the third business day of the following month.
The industries reporting growth, as indicated in the Non-Manufacturing ISM(R) Report On Business(R) monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.
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