What They’re Saying About Non-Manufacturing Economic Activity

September 6, 2016

Economic activity in the U.S. non-manufacturing sector grew in August for the 79th consecutive month, according to the nation’s purchasing and supply executives in the Non-Manufacturing Institute for Supply Management’s latest monthly “Report On Business.”

The non-manufacturing index (NMI) registered 51.4 percent in August, 4.1 percentage points lower than the July reading of 55.5 percent. This represents continued growth in the non-manufacturing sector but at a slower rate than in July.

According to the NMI, 11 non-manufacturing industries reported growth in August: Utilities; Real Estate, Rental & Leasing; Accommodation & Food Services; Finance & Insurance; Educational Services; Health Care & Social Assistance; Public Administration; Management of Companies & Support Services; Professional, Scientific & Technical Services; Information; and Construction.

The seven industries reporting contraction in August were: Other Services; Mining; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Retail Trade; and Arts, Entertainment & Recreation.

Sector Sayings

The majority of the respondents’ comments indicate that there has been a slowing in the level of business for their respective companies. The Non-Manufacturing Institute for Supply Management reported what some of the respondents to its August survey said:

  • “Relatively stable August, with no sharp increase or decrease in sales or pricing. Labor availability and cost remains a very high focal point.” (Accommodation & Food Services)
  • “Overall, the oil and gas industry remain in [a] ‘wait and watch’ mode. The price of oil has impacted investment considerably.” (Construction)
  • “No significant changes to report. Still on track for expansion efforts to begin fourth quarter 2016.” (Finance & Insurance)
  • “Still recovering from the current downturn in the renewable energy market which is expected to pick up in the fourth quarter.” (Professional, Scientific & Technical Services)
  • “Stable with some increase in construction activity.” (Public Administration)
  • “The business environment has softened a bit over the last month. There are now opportunities to fill in the marketplace.” (Retail Trade)
  • “Midyear [is a] slow time for us, summer build is over, fall is historically light, holiday peak build September and October for peak time November and December.” (Transportation & Warehousing)
  • “Good, but slowing from previous months.” (Wholesale Trade)

The non-manufacturing business activity index for August decreased to 51.8 percent, 7.5 percentage points lower than the July reading of 59.3 percent, but still reflected growth for the 85th consecutive month.

The new orders index registered 51.4 percent, 8.9 percentage points lower than the reading of 60.3 percent in July.

The employment index decreased 0.7 percentage point in August to 50.7 percent from the July reading of 51.4 percent.

The prices index decreased 0.1 percentage point from the July reading of 51.9 percent to 51.8 percent, indicating prices increased in August for the fifth consecutive month. The six non-manufacturing industries reporting an increase in prices paid during the month of August included Finance & Insurance.

Source: Non-Manufacturing Institute for Supply Management’s “Report On Business.”

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