ISM Non-Manufacturing Index (NMI) Shows Service Sector Growth Moderated in March

The Institute for Supply Management (ISM) service sector manufacturing index (NMI) moderated in March to a still solid 56.1%. According to the NMI, 16 non-manufacturing industries reported growth.

The consensus forecast was 58.0, ranging from a low of 56.5 to a high of 59.5.

“The non-manufacturing sector’s growth cooled off in March after strong growth in February,” said Timothy R. Fiore, ISM Manufacturing Business Survey Committee. “Respondents remain mostly optimistic about overall business conditions and the economy.”

“They still have underlying concerns about employment resources and capacity constraints.”

The NMI Business Activity Index fell 7.3% from 64.7% to 57.4%, reflecting growth for the 116th consecutive month, albeit at a slower rate. The New Orders Index came in at 59%, a decline of 6.2% from the reading of 65.2% in February.

The Employment Index rose marginally by 0.7% in March to 55.9% from the February reading of 55.2%. The Prices Index increased 4.3 percentage points from the February reading of 54.4% to 58.7%, indicating that prices increased in March for the twenty-second consecutive month.

Survey Responses

• “Labor is tight and in short supply.” (Accommodation & Food Services)
• “While we have a slowed down in residential service and install [area], we are still experiencing strength in the new commercial construction area.” (Construction)
• “Q1 revenue in total on plan or slightly above. Some products slightly below plan. Overall, good start to 2019.” (Finance & Insurance)
• “Supply expenses are up commensurately with business conditions as business activity has outpaced the budget on average four to six percent for our fiscal cycle that [began] 7/1/18.” (Health Care & Social Assistance)
• “There is a sense of relief in our industry with the temporary reprieve of the additional tariffs. As of now, we feel this will help us maintain competitive prices and steady margins over the next quarter.” (Management of Companies & Support Services)
• “Activity level held flat.” (Mining)
• “Initial surge in business at the beginning of the year has peaked and settled to a more stable level.” (Professional, Scientific & Technical Services)
• “Locally as construction grows, a shortage of available workers for the industry is occurring for future projects.” (Public Administration)
• “April is when our real busy season begins and it has arrived early this year, demand is quite strong.” (Real Estate, Rental & Leasing)
• “Labor, weather and regulatory issues have impacted operations.” (Transportation & Warehousing)