ISM REPORT ON BUSINESS NON-MANUFACTURING …

ISM? REPORT ON BUSINESS?

NON-MANUFACTURING

OCTOBER 2019

Analysis by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management? Non-Manufacturing Business Survey Committee

Economic activity in the non-manufacturing sector grew in October for the 117th consecutive month, say the nation's purchasing and supply executives in the latest NonManufacturing ISM? Report On Business?.

The NMI? registered 54.7 percent. This represents continued growth in the non-manufacturing sector, at a faster rate. The Non-Manufacturing

NMI? @

Business Activity Index increased

to 57 percent, 1.8 percentage points higher than the September

reading of 55.2 percent, reflecting growth for the 123rd

consecutive month. The New Orders Index registered 55.6 percent;

1.9 percentage points higher than the reading of 53.7 percent

in September. The Employment Index increased 3.3 percentage

points in October to 53.7 percent from the September reading of 50.4 percent. The Prices Index decreased 3.4 percentage points from the September reading of 60 percent to 56.6 percent, indicating that prices increased in October for the 29th consecutive month. The non-manufacturing sector had an uptick in growth

after reflecting a pullback in September.

54.7% The 13 non-manufacturing industries reporting growth in October -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Utilities; Professional, Scientific & Technical Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Management of Companies & Support Services; Health Care & Social Assistance; Accommodation & Food Services; Arts, Entertainment & Recreation; Construction; Finance & Insurance; Public Administration; and Information.

Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services and Dating Services).

NON-MANUFACTURING AT A GLANCE

Index

NMI? Business Activity New Orders Employment Supplier Deliveries Inventories Prices Backlog of Orders New Export Orders Imports Inventory Sentiment OVERALL ECONOMY

Non-Manufacturing Sector

Oct Index

54.7 57.0 55.6 53.7 52.5 50.5 56.6 48.5 50.0 48.5 57.0

Sep Index

52.6 55.2 53.7 50.4 51.0 53.0 60.0 54.0 52.0 49.0 58.0

% Point Change

+2.1 +1.8 +1.9 +3.3 +1.5 -2.5 -3.4 -5.5 -2.0 -0.5 -1.0

Direction

Growing Growing Growing Growing Slowing Growing Increasing Contracting Unchanged Contracting Too High Growing

Growing

Rate of Change

Faster Faster Faster Faster Faster Slower Slower From Growing From Growing Faster Slower Faster

Faster

Trend* (months)

117 123 123 68

5 3 29 1 1 2 268 123

117

*Number of months moving in current direction. Non-Manufacturing ISM? Report On Business? data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes.

NMI (Non-Manufacturing)

2017

2018

2019

54.7 %

48.6% = Non-Manufacturing Overall Economy Breakeven Line

50% = Non-Manufacturing Economy Breakeven Line

NMI?

In October, the NMI? registered 54.7 percent, 2.1 percentage points higher than the 52.6 percent in September. The non-manufacturing sector grew for the 117th consecutive month. 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 past relationship between the NMI? and the overall economy indicates that the NMI? for October (54.7 percent) corresponds to a 2.1-percent increase in real gross domestic product (GDP) on an annualized basis.

COMMODITIES REPORTED

Commodities Up in Price: Cheese (2); Electrical Components; Lumber Products; and Pork Products. Commodities Down in Price: Bacon; Diesel; Gasoline (3); Steel Products (4); and Transportation Costs. Commodities in Short Supply: Catheters; Construction Subcontractors (22); IV solutions; Labor (13); Labor -- Construction (43);

Labor -- Temporary (4); and Pharmaceuticals (2).

*Indicates both up and down in price. Note: The number of consecutive months the commodity is listed is indicated after each item.

13

ISM? Report On Business?

October 2019

non-manufacturing

Analysis by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management? Non-Manufacturing Business Survey Committee

Business Activities (Non-Manufacturing)

2017

2018

2019

57%

New Orders (Non-Manufacturing)

2017

2018

2019

55.6%

Business Activity

ISM's Business Activity Index registered 57 percent in October, an increase of 1.8 percentage points from the September reading of 55.2 percent. The 13 industries reporting growth of business activity in October -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; Real Estate, Rental & Leasing; Construction; Transportation & Warehousing; Finance & Insurance; Management of Companies & Support Services; Health Care & Social Assistance; Public Administration; and Information.

New Orders

ISM's Non-Manufacturing New Orders Index registered 55.6 percent, an increase of 1.9 percentage points from the September reading of 53.7 percent. The 10 industries reporting growth of new orders in October -- listed in order -- are: Utilities; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Real Estate, Rental & Leasing; Transportation & Warehousing; Health Care & Social Assistance; Management of Companies & Support Services; Professional, Scientific & Technical Services; Information; and Finance & Insurance.

Employment (Non-Manufacturing)

2017

2018

2019

53.7%

Employment

ISM's Non-Manufacturing Employment Index registered 53.7 percent. The 11 industries reporting an increase in employment in October -- listed in order -- are: Utilities; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Public Administration; Management of Companies & Support Services; Transportation & Warehousing; Accommodation & Food Services; Wholesale Trade; Construction; and Health Care & Social Assistance.

Supplier Deliveries (Non-Manufacturing) 51.5%

2017

2018

2019

52.5%

Supplier Deliveries

The Supplier Deliveries Index registered 52.5 percent. The eight industries reporting slower deliveries in October -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Utilities; Other Services; Wholesale Trade; Management of Companies & Support Services; Professional, Scientific & Technical Services; and Health Care & Social Assistance.

Inventory Change (Non-Manufacturing) 53.1%

2017

2018

2019

50.5%

Inventories

ISM's Non-Manufacturing Inventories Index grew in October, registering 50.5 percent. The eight industries reporting an increase in inventories in October -- listed in order -- are: Utilities; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Information; Management of Companies & Support Services; Accommodation & Food Services; Construction; and Wholesale Trade.

Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services,

Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services and Dating Services).

ISM? Report On Business?

October 2019

non-manufacturing

Analysis by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management? Non-Manufacturing Business Survey Committee

Prices (Non-Manufacturing)

2017

2018

55.1%

2019

56.6%

Prices

Prices paid by non-manufacturing organizations for materials and services increased in October, with the index registering 56.6 percent. Eleven non-manufacturing industries reported an increase in prices paid during the month of October, listed in the following order: Wholesale Trade; Retail Trade; Management of Companies & Support Services; Public Administration; Other Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Construction; and Transportation & Warehousing.

Backlog of Orders (Non-Manufacturing)

53.1%

2017

2018

2019

48.5%

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in October. The index registered 48.5 percent, which is 5.5 percentage points lower than the 54 percent reported in September. The five industries reporting an increase in order backlogs in October -- listed in order -- are: Management of Companies & Support Services; Professional, Scientific & Technical Services; Transportation & Warehousing; Health Care & Social Assistance; and Finance & Insurance.

New Export Orders (Non-Manufacturing)

2017

2018

2019

50%

New Export Orders

The New Export Orders Index registered 50 percent. The four industries reporting an increase in new export orders in October are: Real Estate, Rental & Leasing; Accommodation & Food Services; Construction; and Health Care & Social Assistance.

Imports (Non-Manufacturing)

2017

2018

2019

48.5%

Imports

The Imports Index contracted for the second consecutive month, registering 48.5 percent in October. The two industries reporting an increase in imports for the month of October are: Retail Trade; and Accommodation & Food Services.

Inventories Sentiment (Non-Manufacturing)

2017

2018

2019

57%

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in October registered 57 percent. The 10 industries reporting sentiment that their inventories were too high in October -- listed in order -- are: Wholesale Trade; Information; Utilities; Finance & Insurance; Management of Companies & Support Services; Retail Trade; Accommodation & Food Services; Mining; Construction; and Public Administration.

Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services,

Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services and Dating Services).

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