July 5, 2018

June 2018 ISM Non-Manufacturing Index: 59.1 Percent, Up From 58.6 Percent in May

Filed under: Economy — Tom @ 10:30 pm

From the Institute for Supply Management (bolds and most paragraph breaks are mine):

Economic activity in the non-manufacturing sector grew in June for the 101st consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

… The NMI® registered 59.1 percent, which is 0.5 percentage point higher than the May reading of 58.6 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate.

The Non-Manufacturing Business Activity Index increased to 63.9 percent, 2.6 percentage points higher than the May reading of 61.3 percent, reflecting growth for the 107th consecutive month, at a faster rate in June. The New Orders Index registered 63.2 percent, 2.7 percentage points higher than the reading of 60.5 percent in May.

The Employment Index decreased 0.5 percentage point in June to 53.6 percent from the May reading of 54.1 percent. The Prices Index decreased by 3.6 percentage points from the May reading of 64.3 percent to 60.7 percent, indicating that prices increased in June for the 28th consecutive month.

According to the NMI®, 17 non-manufacturing industries reported growth. Respondents continue to be optimistic about business conditions and the overall economy. There is a continuing concern relating to tariffs, capacity constraints and delivery.”

INDUSTRY PERFORMANCE

The 17 non-manufacturing industries reported growth in June — listed in order — are: Mining; Construction; Wholesale Trade; Retail Trade; Public Administration; Educational Services; Real Estate, Rental & Leasing; Management of Companies & Support Services; Transportation & Warehousing; Health Care & Social Assistance; Utilities; Finance & Insurance; Arts, Entertainment & Recreation; Other Services; Professional, Scientific & Technical Services; Information; and Accommodation & Food Services. The only industry reporting a decrease is Agriculture, Forestry, Fishing & Hunting.

The increases in Business Activity and New Orders were heartening, but I wouldn’t want to see them go much higher. The Backlog of Orders figure pulled back from 60.5 percent to 56.5 percent; I wouldn’t want to see that go much lower.

This is generally very good news, and may (emphasis *may*) indicate that second quarter GDP growth may be even stronger than current estimates (an annualized 4.1 percent at the Atlanta Fed, 3.6 percent at Moody’s, 2.79 percent at the New York Fed).

June’s combined Manufacturing and Non-Manufacturing Indices (weighted 12 percent to manufacturing and 88 percent to non-manufacturing), came in at 59.3 percent, which if memory serves is one of the highest results, if not the highest, since the brief recession in 2001.

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  1. [...] ISM in Manufacturing and Non-Manufacturing indices are at their highest combined-weighted level (59.3 percent) in a very long [...]

    Pingback by BizzyBlog — July 6, 2018 @ 1:52 am

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