Wednesday, 22 of November of 2017

Economics. Explained.  

Purchasing Managers Index — Nonmanufacturing

November 3, 2017


The Institute for Supply Management not only publishes an index of manufacturing activity each month, they publish two days later a survey of non-manufacturing firms — which largely consists of services. The business activity index rose 0.9 point in October to 62.2 after having jumped 3.8 points in September.   In October, 16 of 18 service-sector  industries  reported expansion.  Good, solid, broad-based growth at a slightly faster pace than in September.  At its October level the non-manufacturing index equates to GDP growth of 4.3%.

The orders component  edged lower by 0.2 point in October to 62.8 after having surged upwards by 5.9 points in September to 63.0.  Orders continued to flow in at a very rapid rate in October.  Indeed, with the except of a single  month — April of this year — it is the strongest pace of orders since February 2005.

The ISM non-manufacturing index for employment rose 0.7 point in October to 57.5 after having climbed 0.6 point in September.   Jobs growth should continue in upcoming months at about the same pace we  have seen of roughly 170 thousand per month.

Finally,  the price component fell 3.6 points in October to 62.7 after having surged in September by 8.4 points..   That is the fifth consecutive monthly increase.  The price run up in September probably reflect the interruption of the supply chain in that month from the hurricanes.  However, even apart from the hurricanes it is clear that non-manufacturing firms are encountering higher prices for their materials.

Stephen Slifer


Charleston, SC

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