June 5, 2018

May 2018 ISM Non-Manufacturing: 58.6 Percent, Up From April’s 56.8 Percent

Filed under: Economy — Tom @ 10:31 am

From the Institute for Supply Management (bolds and most paragraph breaks added by me):

Economic activity in the non-manufacturing sector grew in May for the 100th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 58.6 percent, which is 1.8 percentage points higher than the April reading of 56.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate.

The Non-Manufacturing Business Activity Index increased to 61.3 percent, 2.2 percentage points higher than the April reading of 59.1 percent, reflecting growth for the 106th consecutive month, at a faster rate in May. The New Orders Index registered 60.5 percent, 0.5 percentage point higher than the reading of 60 percent in April.

The Employment Index increased 0.5 percentage point in May to 54.1 percent from the April reading of 53.6 percent. The Prices Index increased by 2.5 percentage points from the April reading of 61.8 percent to 64.3 percent, indicating that prices increased in May for the 27th consecutive month.

According to the NMI®, 14 non-manufacturing industries reported growth. The majority of respondents are optimistic about business conditions and the overall economy.

There continue to be concerns about the uncertainty surrounding tariffs, trade agreements and the impact on cost of goods sold.

The 14 non-manufacturing industries reported growth in May — listed in order — are: Wholesale Trade; Mining; Real Estate, Rental & Leasing; Construction; Retail Trade; Management of Companies & Support Services; Professional, Scientific & Technical Services; Transportation & Warehousing; Public Administration; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Finance & Insurance; Utilities; and Other Services. The only industry reporting a decrease is Information.

This beats predictions reported at CNBC of 57.6 percent.

Since the report tracks 18 industries, three were flat.

The Business Activity and New Orders indices both went above 60 percent, which is great. If they move into the mid-60s, overheating concerns leading to inflation might become valid.

The Backlog of Orders did a quantum leap from 52.0 percent to 60.5 percent. This is great news, because as I’ve mentioned with the Manufacturing Index, it makes production (and in the NMI’s case, provision of services) more predictable, and therefore more easily planned.


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