Thursday, 24 of May of 2018

Economics. Explained.  

Purchasing Managers Index — Nonmanufacturing

May 3, 2018

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 declined 1.5 points in April to 59.1 after having fallen 2.2 points in March.   In April all 18 service-sector  industries  reported expansion.  Good, solid, broad-based growth at a relatively high level.  At its April level the non-manufacturing index equates to GDP growth of 2.9%.

The orders component  rose 0.5 point in April to 60.0 after having cooled off  by 5.3 points in March.  Orders continued to flow in in April at a solid pace.  February (at 64.8) was the strongest month for orders since August 2005.

The ISM non-manufacturing index for employment fell 3.0 points in April to 53.6 after having risen 1.6 points in March.   The January level (at 61.6) was by far the highest level thus far in the business cycle.  Jobs growth should continue in upcoming months at about the same pace we  have seen of roughly 200 thousand per month.

Finally,  the price component rose 0.3 points in April to 61.8 after having climbed 0.5 point in March.   That is the eighth consecutive monthly level above 60.0.  It is clear that non-manufacturing firms are encountering higher prices for their materials.

Stephen Slifer


Charleston, SC

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