Sections: Economy

ISM Report on Business (NMI): Service Sector Growth Outpaces Expectations

(Photo: Reuters)

The Institute for Supply Management’s non-manufacturing index (NMI) rose to 59.1 in October from 56.9 in September, beating economists’ expectations. Economists surveyed by The Wall Street Journal had forecast the ISM Non-Manufacturing Report on Business index to decline to 56.8.

INDUSTRY PERFORMANCE

The 14 non-manufacturing industries reporting growth in October — listed in order — are: Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Utilities; Retail Trade; Construction; Management of Companies & Support Services; Information; Finance & Insurance; Other Services; Arts, Entertainment & Recreation; Public Administration; Wholesale Trade; and Accommodation & Food Services. The only industry reporting contraction in October is Mining.

The report said survey respondents “remain mostly positive about business conditions and the overall economy,” but the historically lower-paying service sector outpacing manufacturing and other higher-paying sectors has become a concerning trend.

The NMI is a barometer for the nation’s restaurants, builders, bankers and other service providers. While many are lopsided toward lower wages, consumer spending is the primary driver of the economic expansion in the U.S. and a full two-thirds of those outlays are on the service sector.

ISM^® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM^® NON-MANUFACTURING AND ISM^® MANUFACTURING SURVEYS* OCTOBER 2015
	Non-Manufacturing						Manufacturing
Index	Series Index Oct	Series Index Sep	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Oct	Series Index Sep	Percent Point Change
NMI^®/PMI^®	59.1	56.9	+2.2	Growing	Faster	69	50.1	50.2	-0.1
Business Activity/Production	63.0	60.2	+2.8	Growing	Faster	75	52.9	51.8	+1.1
New Orders	62.0	56.7	+5.3	Growing	Faster	75	52.9	50.1	+2.8
Employment	59.2	58.3	+0.9	Growing	Faster	20	47.6	50.5	-2.9
Supplier Deliveries	52.0	52.5	-0.5	Slowing	Slower	5	50.4	50.2	+0.2
Inventories	52.5	51.0	+1.5	Growing	Faster	7	46.5	48.5	-2.0
Prices	49.1	48.4	+0.7	Decreasing	Slower	2	39.0	38.0	+1.0
Backlog of Orders	54.5	54.5	0.0	Growing	Same	5	42.5	41.5	+1.0
New Export Orders	54.5	52.5	+2.0	Growing	Faster	6	47.5	46.5	+1.0
Imports	54.5	53.0	+1.5	Growing	Faster	4	47.0	50.5	-3.5
Inventory Sentiment	63.0	65.0	-2.0	Too High	Slower	221	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	51.0	54.5	-3.5
Overall Economy				Growing	Faster	75
Non-Manufacturing Sector				Growing	Faster	69

* Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.