The ISM Non-manufacturing report for March 2011 is out. The overall index increased to 57.3%, 2.4 points lower than February's 59.7%. This report is also referred to as the services index, or service sector index.
New orders decreased 0.3 percentage points to 64.1%. Business activity was 59.7%, with a 7.2 percentage point plunge from last month. Yet, here we are again, the employment index declined 1.9 percentage points. The employment index is at 53.7%, which means jobs is barely breaking even when it comes to adding any workers. Below is the table from the ISM services report, edited.
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE March 2011 | ||||||
|---|---|---|---|---|---|---|
| Index | Series Index Mar. |
Series Index Feb. |
Percent Point Change |
Direction | Rate of Change |
Trend (Months) |
| NMI/PMI | 57.3 | 59.7 | -2.4 | Growing | Slower | 16 |
| Business Activity/Production | 59.7 | 66.9 | -7.2 | Growing | Slower | 20 |
| New Orders | 64.1 | 64.4 | -0.3 | Growing | Slower | 20 |
| Employment | 53.7 | 55.6 | -1.9 | Growing | Slower | 7 |
| Supplier Deliveries | 51.5 | 52.0 | -0.5 | Slowing | Slower | 12 |
| Inventories | 55.5 | 55.5 | 0.0 | Growing | Same | 2 |
| Prices | 72.1 | 73.3 | -1.2 | Increasing | Slower | 20 |
| Backlog of Orders | 56.0 | 52.0 | +4.0 | Growing | Faster | 3 |
| New Export Orders | 59.0 | 56.5 | +2.5 | Growing | Faster | 7 |
| Imports | 50.0 | 53.5 | -3.5 | Unchanged | From Growing | 1 |
| Inventory Sentiment | 67.0 | 57.5 | +9.5 | Too High | Faster | 166 |
Below is the graph for the March non-manufacturing ISM business activity index, which plunged to 59.7%.
New orders was 64.1%, yet the ISM quotes a client as claiming the turnaround is here.
Contrast the above with the employment index. 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. Yeah, jobs are a flat line.
Eleven industries reported increased employment, three industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "Continue to refill vacancies" and "Still under hiring freeze."
The industries reporting an increase in employment in March — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Transportation & Warehousing; Arts, Entertainment & Recreation; Management of Companies & Support Services; Other Services; Public Administration; Wholesale Trade; Professional, Scientific & Technical Services; and Construction. The industries reporting a reduction in employment in March are: Educational Services; Finance & Insurance; and Health Care & Social Assistance.
Prices decreased by 1.2 percentage points in March, but is still high at 72.1%. The report states all 18 industries covered by the services index ISM reported an increase in prices.
31% of those surveyed do not have or monitor inventories. Yet inventory sentiment, surged 9.5 percentage points to an overall reported too high. Changes in inventories does affect U.S. GDP. Some companies indicated they were stockpiling Japanese products and believe Japan's capacity will be diminished. Yet, inventories was unchanged from last month, at 55.5%. Below is the graph for inventory sentiment, an indicator if companies will reduce inventories in the future.
To read more sub-indices and details see the actual report (although no eye candy from the ISM).
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