ISM Non-Manufacturing Index Rose in August for 21st Consecutive Month

Economic activity in the non-manufacturing sector was up again in August, marking the 21st consecutive month of increases.

The Non-Manufacturing ISM Report On Business, issued this week by the Institute for Supply Management (ISM), showed that:

The Non-Manufacturing Index registered 53.3 percent in August, 0.6 percentage point higher than the 52.7 percent registered in July, and indicating continued growth at a slightly faster rate in the non-manufacturing sector. (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.)

The Non-Manufacturing Business Activity Index decreased 0.5 percentage point to 55.6 percent, reflecting growth for the 25th consecutive month, but at a slower rate than in July.

The New Orders Index increased by 1.1 percentage points to 52.8 percent.

The Employment Index decreased 0.9 percentage point to 51.6 percent, indicating growth in employment for the 12th consecutive month, but at a slower rate than in July.

The Prices Index increased 7.6 percentage points to 64.2 percent, indicating that prices increased at a faster rate in August when compared to July.

According to the NMI, 10 non-manufacturing industries reported growth in August. The list (in order) :



Retail Trade

Wholesale Trade

Transportation & Warehousing

Accommodation & Food Services

Agriculture, Forestry, Fishing & Hunting


Public Administration

Professional, Scientific & Technical Services

Five industries reported contraction:

Educational Services

Arts, Entertainment & Recreation

Management of Companies & Support Services

Health Care & Social Assistance

Finance & Insurance

Based on respondents' comments, ISM maintains that there is still quite a bit of uncertainty about the economy despite the long run of overall increases in the NMI. As a survey respondent in the arts, entertainment and recreation sector said, "Customer traffic is trending lower, but spending per person continues to increase. Labor cost savings realized through attrition, as fewer replacements are hired. The outlook for the remainder of 2011 is cautiously optimistic, with increased investment in marketing. Sticky prices' are keeping operating expenses elevated even as commodity supply eases."

Underscoring the uncertainty, the August ISM Manufacturing Report released last week was down 0.3 percent, marking the second straight month of decline.

For more details on the August results, see the complete ISM report here.

TAGS: Finance
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