Economic activity in the non-manufacturing sector contracted in May for the second consecutive month, according to the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.
“The NMI registered 45.4%, 3.6 percentage points higher than the April reading of 41.8%. This reading represents contraction in the non-manufacturing sector for the second consecutive month, following a 122-month period of expansion,” Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, chair of the Institute for Supply Management (ISM) Non-Manufacturing Business Survey Committee, said. “The Business Activity Index increased 15 percentage points from April’s figure, registering 41%. The New Orders Index registered 41.9%, 9 percentage points higher than the reading of 32.9% in April. The Employment Index increased to 31.8%, 1.8 percentage points higher than the April reading of 30%.
“The Supplier Deliveries Index registered at 67%, down 11.3 percentage points from April’s all-time-high reading of 78.3%, which elevated the composite NMI. The Supplier Deliveries Index is one of four equally weighted sub-indexes that directly factor into the NMI, along with Business Activity, New Orders and Employment. Supplier Deliveries is the only ISM Report On Business index that is inversed. A reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases. The higher readings for supplier deliveries the past three months are primarily a product of supply problems related to the coronavirus (COVID-19) pandemic.
“The Prices Index figure of 55.6% is 0.5 percentage point higher than the April reading of 55.1%, indicating that prices increased in May. According to the NMI, four non-manufacturing industries reported growth. The non-manufacturing composite index indicated contraction for a second consecutive time. The sector’s previous period of contraction was for two months in 2009: November (with an NMI of 49.5%) and December (49.7%). Respondents remain concerned about the ongoing impact of the coronavirus. Additionally, many of the respondents’ respective companies are hoping and/or planning for a resumption of business.”
Industry Performance
The four non-manufacturing industries reporting growth in May were Agriculture, Forestry, Fishing and Hunting; Finance & Insurance; Public Administration; and Information. The 14 industries reporting a decrease in May — listed in order — were Mining; Arts, Entertainment & Recreation; Other Services; Construction; Educational Services; Professional, Scientific and Technical Services; Utilities; Wholesale Trade; Accommodation and Food Services; Management of Companies and Support Services; Real Estate, Rental and Leasing; Transportation and Warehousing; Health Care and Social Assistance; and Retail Trade.
What Respondents Are Saying
ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCECOMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS* May 2020 |
|||||||||
Index | Non-Manufacturing | Manufacturing | |||||||
Series Index
May |
Series Index
Apr |
Percent Point Change |
Direction |
Rate of Change |
Trend** (Months) |
Series Index
May |
Series Index
Apr |
Percent Point Change | |
NMI®/PMI® | 45.4 | 41.8 | +3.6 | Contracting | Slower | 2 | 43.1 | 41.5 | +1.6 |
Business Activity/Production | 41.0 | 26.0 | +15.0 | Contracting | Slower | 3 | 33.2 | 27.5 | +5.7 |
New Orders | 41.9 | 32.9 | +9.0 | Contracting | Slower | 2 | 31.8 | 27.1 | +4.7 |
Employment | 31.8 | 30.0 | +1.8 | Contracting | Slower | 3 | 32.1 | 27.5 | +4.6 |
Supplier Deliveries | 67.0 | 78.3 | -11.3 | Slowing | Slower | 12 | 68.0 | 76.0 | -8.0 |
Inventories | 48.0 | 46.9 | +1.1 | Contracting | Slower | 3 | 50.4 | 49.7 | +0.7 |
Prices | 55.6 | 55.1 | +0.5 | Increasing | Faster | 2 | 40.8 | 35.3 | +5.5 |
Backlog of Orders | 46.4 | 47.7 | -1.3 | Contracting | Faster | 2 | 38.2 | 37.8 | +0.4 |
New Export Orders | 41.5 | 36.3 | +5.2 | Contracting | Slower | 3 | 39.5 | 35.3 | +4.2 |
Imports | 43.7 | 49.3 | -5.6 | Contracting | Faster
|
3 | 41.3 | 42.7 | -1.4 |
Inventory Sentiment | 55.1 | 62.6 | -7.5 | Too High | Slower | 2 | N/A | N/A | N/A |
Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 46.2 | 48.8 | -2.6 |
Overall Economy | Contracting | Slower | 2 | ||||||
Non-Manufacturing Sector | Contracting | Slower | 2 |
*Non-Manufacturing ISM Report On Business data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment indexes. Manufacturing ISM Report On Business data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
**Number of months moving in current direction.
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