Economic activity in the non-manufacturing sector grew in June after two consecutive months of contraction, according to the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.
“The NMI registered 57.1%, 11.7 percentage points higher than the May reading of 45.4%. This reading represents growth in the non-manufacturing sector after a two-month period of contraction preceded by 122 straight months 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. “This is the largest single-month percentage-point increase in the NMI since its debut in 1997. (In April, the index suffered its biggest one-month decrease, a 10.7-percent drop.) The Business Activity Index registered 66%, up 25 percentage points from May’s figure of 41%. The New Orders Index registered 61.6%, 19.7 percentage points higher than the reading of 41.9% in May. The Employment Index increased to 43.1%; 11.3 percentage points higher than the May reading of 31.8%.
“The Supplier Deliveries Index registered at 57.5%, down 9.5 percentage points from May’s reading of 67%. 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 index readings the previous three months were primarily a product of supply problems related to the coronavirus (COVID-19) pandemic. The Supplier Deliveries Index now more closely correlates to current supply and demand.
“The Prices Index figure of 62.4% is 6.8 percentage points higher than the May reading of 55.6%, indicating that prices increased in June. According to the NMI, 14 non-manufacturing industries reported growth. The non-manufacturing composite index indicated growth after two consecutive months of contraction. The sector’s previous period of contraction was for two months in 2009: November (with an NMI of 49.5%) and December (with an NMI of 49.7%). Respondents remain concerned about the coronavirus and the more recent civil unrest; however, they are cautiously optimistic about business conditions and the economy as businesses are beginning to reopen,” Nieves said.
Industry Performance
The 14 non-manufacturing industries reporting growth in June — listed in order — were: agriculture, forestry, fishing and hunting; accommodation and food services; wholesale trade; real estate, rental and leasing; health care and social assistance; construction; retail trade; utilities; transportation and warehousing; arts, entertainment and recreation; information; finance and insurance; public administration; and professional, scientific and technical Services. The three industries reporting a decrease in June were: mining; other services; and management of companies and support services.
What Respondents Are Saying
ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS* June 2020 |
|||||||||
Index | Non-Manufacturing | Manufacturing | |||||||
Series Index
Jun |
Series Index
May |
Percent Point Change |
Direction |
Rate of Change |
Trend** (Months) |
Series Index
Jun |
Series Index
May |
Percent Point Change | |
NMI®/PMI® | 57.1 | 45.4 | +11.7 | Growing | From Contracting | 1 | 52.6 | 43.1 | +9.5 |
Business Activity/
Production |
66.0 | 41.0 | +25.0 | Growing | From Contracting | 1 | 57.3 | 33.2 | +24.1 |
New Orders | 61.6 | 41.9 | +19.7 | Growing | From Contracting | 1 | 56.4 | 31.8 | +24.6 |
Employment | 43.1 | 31.8 | +11.3 | Contracting | Slower | 4 | 42.1 | 32.1 | +10.0 |
Supplier Deliveries | 57.5 | 67.0 | -9.5 | Slowing | Slower | 13 | 56.9 | 68.0 | -11.1 |
Inventories | 60.7 | 48.0 | +12.7 | Growing | From Contracting | 1 | 50.5 | 50.4 | +0.1 |
Prices | 62.4 | 55.6 | +6.8 | Increasing | Faster | 3 | 51.3 | 40.8 | +10.5 |
Backlog of Orders | 51.9 | 46.4 | +5.5 | Growing | From Contracting | 1 | 45.3 | 38.2 | +7.1 |
New Export Orders | 58.9 | 41.5 | +17.4 | Growing | From Contracting | 1 | 47.6 | 39.5 | +8.1 |
Imports | 52.9 | 43.7 | +9.2 | Growing | From Contracting
|
1 | 48.8 | 41.3 | +7.5 |
Inventory Sentiment | 55.9 | 55.1 | +0.8 | Too High | Faster | 3 | N/A | N/A | N/A |
Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 44.6 | 46.2 | -1.6 |
Overall Economy | Growing | From Contracting | 1 | ||||||
Non-Manufacturing Sector | Growing | From Contracting | 1 |
*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.
Like this story? Begin each business day with news you need to know! Click here to register now for our FREE Daily E-News Broadcast and start YOUR day informed!