The ISM Non-manufacturing report for March 2010 is out. The overall index increased to 55.4%, from last month's 53%.
The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 60 percent, reflecting growth for the fourth consecutive month. The New Orders Index increased 7.3 percentage points to 62.3 percent, and the Employment Index increased 1.2 percentage points to 49.8 percent. The Prices Index increased 2.5 percentage points to 62.9 percent in March, indicating an increase in prices paid from February. According to the NMI, 14 non-manufacturing industries reported growth in March. Respondents' comments are mostly positive about business conditions and the direction of the economy."
Recall anything above 50 is growth and anything below 50 is contraction. So, we have a really good report, except....on employment. What is it going to take to get these companies to start hiring people? While employment is a lagging indicator, this is beyond lagging, it's like dragging horses to the water. Below is the graph, normalized to zero to show contraction, on employment from the survey.
Look at what business are saying on the lack of hires:
Six industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "We are staffing to volume" and "Jobs are not being filled pending budget issues."
The industries reporting an increase in employment in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Construction; Retail Trade; Information; and Finance & Insurance. The industries reporting a reduction in employment in March — listed in order — are: Real Estate, Rental & Leasing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Transportation & Warehousing; Public Administration; Educational Services; Wholesale Trade; and Management of Companies & Support Services.
Pending budget issues. Hmmm, we even have a tax credit to get these businesses to hire people, so what budget issue do they need?
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE MARCH 2010 | ||||||
|---|---|---|---|---|---|---|
| Non-Manufacturing | ||||||
| Index | Series Index Mar. |
Series Index Feb. |
% Point Change |
Direction | Rate of Change |
Trend (Mon.) |
| NMI/PMI | 55.4 | 53.0 | +2.4 | Growing | Faster | 3 |
|
Business Activity/ Production |
60.0 | 54.8 | +5.2 | Growing | Faster | 4 |
| New Orders | 62.3 | 55.0 | +7.3 | Growing | Faster | 7 |
| Employment | 49.8 | 48.6 | +1.2 | Contracting | Slower | 27 |
| Supplier Deliveries | 49.5 | 53.5 | -4.0 | Faster | From Slowing | 1 |
| Inventories | 46.5 | 45.0 | +1.5 | Contracting | Slower | 3 |
| Prices | 62.9 | 60.4 | +2.5 | Increasing | Faster | 8 |
| Backlog of Orders | 55.5 | 46.0 | +9.5 | Growing | From Contracting | 1 |
| New Export Orders | 57.5 | 47.0 | +10.5 | Growing | From Contracting | 1 |
| Imports | 51.0 | 48.5 | +2.5 | Growing | From Contracting | 1 |
| Inventory Sentiment | 52.5 | 60.0 | -7.5 | Too High | Slower | 154 |
Below is new orders, which looks very good.
The 14 industries reporting growth of new orders in March — listed in order — are: Management of Companies & Support Services; Utilities; Information; Mining; Accommodation & Food Services; Retail Trade; Construction; Other Services; Health Care & Social Assistance; Transportation & Warehousing; Public Administration; Wholesale Trade; Finance & Insurance; and Educational Services. The only industry reporting contraction of new orders in March is Real Estate, Rental & Leasing.
Other things to note are prices did not have the blow out they did for manufacturing, which is a good sign for inflation and finally inventories are going down, in a trend,although clearly businesses do not believe they are selling off their inventories fast enough.
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