Manufacturing news: ISM reports January non-manufacturing index comes in at 42.9 percent
Despite 2.1 percent uptick, contraction is still occuring
Jeff Berman, Group News Editor -- Modern Materials Handling, 2/5/2009
TEMPE, Ariz.—As has been the case in recent months, economic conditions continue to take a toll on the non-manufacturing sector economy, according to the January Non-Manufacturing Institute for Supply Management Report On Business.
The ISM said that the Non-Manufacturing Index (NMI) was 42.9 percent, which was 2.1 percentage points higher than the seasonally-adjusted 40.1 percent index in December (and the highest monthly reading since 44.66 percent in October), which, the ISM said, indicates contraction in the non-manufacturing sector for the fourth consecutive month, albeit at a slightly slower rate. Readings below 50 percent indicate contraction is occurring.
Other notable takeaways from the report include:
the Non-Manufacturing Business Activity Index up 5.3 percentage points to 44.2 percent;the New Orders Index up 2.7 percentage points to 41.6 percent;the Employment Index down 0.1 percentage point to 34.4 percent;the Prices Index up 6.4 percent to 42.5 percent in January, indicating a decrease in prices from December.
January’s price index at 42.5 percent is significantly above November’s 37.4 reading, which dropped 16.8 points from October, marking the largest single point drop since the ISM began tracking prices in 1997, according to Anthony Nieves, chair of ISM’s non-manufacturing business survey committee.
In an interview last month, Nieves said that even though the monthly NMI figures are showing some improvement, “it is not giving us any look of optimism by any stretch.”
New export orders were down to 39.0 percent from 39.5 percent in December, imports were up eight percent to 40.5, and inventories were down 7.5 percent to 41.5.
Transportation and warehousing were among the sectors reporting a decrease in inventories, with some ISM members saying they are “reducing the amount of [of inventory] being warehoused” and “adjusting to business levels.”
And prices for eight commodities, including diesel fuel, gasoline, and steel, were up in January, meanwhile, 18 commodities, including drywall and heating fuel, were down.
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