The ISM Non-manufacturing report for July 2011 shows the overall index increased to 53.3%, the same as June and up +0.6 points from July's 52.7%. This report is also referred to as the services index, or service sector index.
New orders increased +1.1 percentage points to 52.8% but Business activity dropped -0.5 points to 55.6%. Much of the commentary from the report mentions confidence and fear about future economic conditions. Below is the ISM services table, abbreviated.
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE AUGUST 2011 | ||||||
|---|---|---|---|---|---|---|
| Index | Series Index August |
Series Index July |
Percent Point Change |
Direction | Rate of Change |
Trend (Months) |
| NMI | 53.3 | 52.7 | +0.6 | Growing | Faster | 21 |
| Business Activity/Production | 55.6 | 56.1 | -0.5 | Growing | Slower | 25 |
| New Orders | 52.8 | 51.7 | +1.1 | Growing | Faster | 25 |
| Employment | 51.6 | 52.5 | -0.9 | Growing | Slower | 12 |
| Supplier Deliveries | 53.0 | 50.5 | +2.5 | Slowing | Faster | 17 |
| Inventories | 53.5 | 56.5 | -3.0 | Growing | Slower | 7 |
| Prices | 64.2 | 56.6 | +7.6 | Increasing | Faster | 25 |
| Backlog of Orders | 47.5 | 44.0 | +3.5 | Contracting | Slower | 3 |
| New Export Orders | 56.5 | 49.0 | +7.5 | Growing | From Contracting | 1 |
| Imports | 53.5 | 47.5 | +6.0 | Growing | From Contracting | 1 |
| Inventory Sentiment | 56.0 | 59.5 | -3.5 | Too High | Slower | 171 |
Below is the graph for the non-manufacturing ISM business activity index, or current conditions.
Mining; Accommodation & Food Services; Information; Utilities; Finance & Insurance; Transportation & Warehousing; Wholesale Trade; and Public Administration. The five industries reporting decreased business activity in August are: Arts, Entertainment & Recreation; Educational Services; Construction; Health Care & Social Assistance; and Retail Trade.
New orders increased, and generally 50% is the inflection point between expansion and contraction. It's an indicator of future business activity, A comment from the report:
More work coming online and Increasing capital project expenditures
The employment index dropped -0.9 points in August to 51.6%. Remember anything below 50 means contraction or in the case of workers, firing people. The below graph has been normalized to 50, the ISM inflection point for expansion versus contraction. If above 50 is growth, well... Another decline in employment, considering the zero job growth, at this point is plain not a good sign.
Mining; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Information; Transportation & Warehousing; and Wholesale Trade. The industries reporting a reduction in employment in August — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Management of Companies & Support Services; Accommodation & Food Services; Other Services; Finance & Insurance; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Public Administration.
Notice that Scientific and Technical have been on this list repeatedly, the same sector where corporations cry labor shortage. Obviously there is not one.
Below are supplier deliveries or vendor supplies and it's how fast businesses are getting their stuff to make more stuff. Above 50 is a slow down, which is opposite how many of these sub-indices are defined. Slow-downs mean more demand and also can limit the ability of that business to produce, or business activity. No stuff to make more stuff and you're stuck. In August the index increased 2.5 percentage points to 53, with utilities being the #1 sector reporting slower supply deliveries to their businesses.
Prices paid by the services sector jumped 7.6 percentage points to 64.2. Agriculture topped the list reporting price increases.
Order backlogs are still in contraction, but up 3.5 percentage points from last month. 39% of survey respondents do not measure order backlogs.
27% of those surveyed do not have or monitor inventories, yet inventories dropped -3.0 percentage points to 53.5%. Export orders, or new orders from overseas jumped +7.5 percentage points to 56.5%, although use of import materials for their businesses also rose +6.0 percentage points to 53.5%.
The NMI is made up of: Business Activity, New Orders, Employment and Supplier Deliveries, all equally weighted.
To read more sub-indices and details see the actual report (although no eye candy from the ISM).
Here is July's overview on the services index.
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