Tuesday, 26 of September of 2017

Economics. Explained.  

Purchasing Managers Index — Nonmanufacturing

September 6, 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 1.6 points in August to 57.5 after having fallen 4.9 points in July.   In August, 15 of 17 service-sector  industries  reported expansion.  Good, solid, broad-based growth at a slightly faster pace than in July.  At its August level the non-manufacturing index equates to GDP growth of 2.5%.

The orders component  rose 2 points in August to 57.1 declined 5.4 points in July.  Orders continued to flow in at a healthy pace in August.

The ISM non-manufacturing index for employment rose 2.6 points in August to 56.2 after having declined 2.2 points in July.  However, this series has been fairly volatile in other recent months with big increases followed by big declines a rather common occurrence.  Jobs growth should continue in upcoming months at about the same pace we  have seen of roughly 180 thousand per month.

Finally,  the price component rose 2.2 points in August to 57.9 after having climbed 3.6 points in July to 55.7 after having risen 2.9 points in June.   While volatile on a month to month basis, prices paid by service sector firms are rising at a moderate pace.

Stephen Slifer


Charleston, SC

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