ISM Report Supports Growth Forecasts in Non-Manufacturing Sectors

While there has been some decline in its key metrics, the September edition of the Non-Manufacturing Report on Business from the Institute for Supply Management (ISM) indicates steady growth.

The index ISM uses to measure non-manufacturing growth—known as the NMI—came in at 56.9 in September (a level of 50 or higher indicates growth), a 2.1 percent decrease from August's 59.0, and 3.4 percent off from July's 60.3, which is its highest reading since January 2008. The September PMI is 0.4 percent below the 12-month average of 57.3.

The non-manufacturing sector has grown for 68 straight months, while the over all economy has grown for 74 straight months.

Three of the report's four key metrics, including the NMI, were down in September. Business Activity/Production was down 3.7 percent to 56.9, and new orders were off 6.7 percent to 56.7. Employment was the lone key metric on the right sight of growth, up 2.3 percent to 58.3.

Comments submitted by ISM member respondents for the report were mixed, which reflects the current economic outlook.

An information services respondent noted that the turmoil in Europe has not affected business, while an educational services respondent observed that the outlook is improving and economic conditions are stabilizing. And a retail trade respondent said that recent economic turmoil has caused sales to drop, noting he feels it is only temporary if the stock market returns to normal.

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