The ISM Non-manufacturing report for October 2010 is out. The overall index increased to 54.3%, 1.1 points higher than September's 53.2%. Last month's services index increased 1.7 percentage points. The ISM indexes mean anything above 50 is growth, below 50 is contraction. Notice the jump is not as high as earlier in the year.
Below is the table from the ISM services report, edited. Business activity, or production boomed, up +5.6 to 58.4% from last month, yet employment hiring is limp still, with only a 0.7 point jump from last month. Last month business activity had dropped 1.6 percentage points. Again, we see businesses squeezing workers, the increased activity is just not paying off in terms of new hires.
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE OCTOBER 2010 | ||||||
|---|---|---|---|---|---|---|
| Index | Series Index Oct. |
Series Index Sept. |
Percent Point Change |
Direction | Rate of Change |
Trend** (Months) |
| NMI/PMI | 54.3 | 53.2 | +1.1 | Growing | Faster | 10 |
| Business Activity/Production | 58.4 | 52.8 | +5.6 | Growing | Faster | 11 |
| New Orders | 56.7 | 54.9 | +1.8 | Growing | Faster | 14 |
| Employment | 50.9 | 50.2 | +0.7 | Growing | Faster | 2 |
| Supplier Deliveries | 51.0 | 55.0 | -4.0 | Slowing | Slower | 7 |
| Inventories | 47.5 | 47.0 | +0.5 | Contracting | Slower | 2 |
| Prices | 68.3 | 60.1 | +8.2 | Increasing | Faster | 15 |
| Backlog of Orders | 52.0 | 48.0 | +4.0 | Growing | From Contracting | 1 |
| New Export Orders | 55.5 | 58.0 | -2.5 | Growing | Slower | 2 |
| Imports | 54.0 | 53.0 | +1.0 | Growing | Faster | 3 |
| Inventory Sentiment | 61.5 | 59.5 | +2.0 | Too High | Faster | 161 |
Below is the business activity index. Notice the jump.
New orders increased 1.8 percentage points to 56.7%. The report notes that new projects were approved which were on hold, that's good news.
While employment increased 0.7 percentage points, it's still anemic, barely registering any growth, at 50.9%. The below graph is re-centered around the ISM index inflection point to show we just are not creating jobs here and hiring people!
Supplier deliveries dropped -4 percentage points to 51 and prices jumped 8 percentage points.
Prices paid by non-manufacturing organizations for purchased materials and services increased in October at a significantly faster rate than in September. ISM's Non-Manufacturing Prices Index for October registered 68.3 percent, 8.2 percentage points higher than the 60.1 percent reported in September.
To read more sub-indices and details see the actual report (although no eye candy from the ISM).
This report is about non-manufacturing. Here are the businesses included in the ISM index:
The Non-Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).
I see a host of press reports referring to this as manufacturing, it is not. The ISM manufacturing index was released two days ago.
New orders implies future economic growth and this index correlates to about ~65% to 70% of U.S. GDP, so positive is good, although we need a huge spike in jobs to make it great news.
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