Subscribe to our free, weekly email newsletter!


Materials handling business: ISM Non-Manufacturing Index continues to show growth

By Jeff Berman, Group News Editor
June 03, 2010

Consistency appears to be the theme of late when it comes to the Institute for Supply Management’s (ISM) monthly report on the non-manufacturing sector.

The ISM’s index for measuring the sector’s overall health—known as the NMI—was 55.4 percent in May for the third straight month. Like the ISM’s Manufacturing Index, a reading of 50 percent or higher represents growth.

While the percentage did not improve on a sequential basis, ISM officials noted that the non-manufacturing sector is still growing. This sentiment was also apparent in the ISM’s Non-Manufacturing Business Activity Index, which expanded by 0.8 percentage points to 61.1 percent and growing for the sixth straight month.

Of the four indices that comprise the NMI, employment at 50.4 percent, a 0.9 percent gain from April, was up for the first time after 28 months of contraction. Among the other indices are Business Activity (at 61.1 percent) and New Orders, down 1.1 percent at 57.1 percent.

“I am a little cautious about the employment index, because it is coming from such a low point and would like to see how it pans out over the next two or three months to ensure that job growth is taking place in the non-manufacturing sector,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, in an interview.

Looking at the report overall, Nieves said there is nothing negative with only good news coming out of this data. And even with prices down 4.1 percent at 60.6 and dropping for the tenth straight month, inventories jumped 8.0 percent to 62.5 percent for the second straight month of growth.

And an increase of things like inventories and backlog of orders—up 6.5 percent at 56.0—bode well for positive signs of an economic recovery and growth, according to Nieves.

Comments in the report from purchasing and supply executives indicate growth is occurring, albeit tempered with a consensus of cautious optimism or a wait and see approach.

This feedback is to be expected, given how the economy was “battered and bruised” for a long period of time before signs of a rebound began to appear, said Nieves.
“Late last year and into early this year, we saw some signs of stagnant growth, and kept hearing about a jobless recovery, which results in a longer trend as far as the recovery goes…and people want to wait and see and we cannot blame them,” said Nieves.

Looking forward, Nieves noted that a decline in consumer spending has the potential to impact NMI growth but to what level is hard to tell as consumer confidence and consumer spending are large drivers for the economy.

And if jobs do not meaningfully come back and confidence in the economy wanes, it could have a negative impact on non-manufacturing industries, said Nieves. 

About the Author

image
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff joined the Supply Chain Group in 2005 and leads online and print news operations for these publications. In 2009, Jeff led Logistics Management to the Silver Medal of Folio’s Eddie Awards in the Best B2B Transportation/Travel Website category. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. If you want to contact Jeff with a news tip or idea,
please send an e-mail to .(JavaScript must be enabled to view this email address).


Subscribe to Modern Materials Handling magazine

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Recent Entries

Automotive OEM Diversity Vuteq deployed an innovative WMS on iPads adapted for the DC. The result is improved quality and a satisfied customer.

One of the world’s largest wholesale distributors of technology solutions rolled out a WCS, WMS and labor management across six U.S. distribution centers to keep up with demand.

A voice-over IP solution is driving new efficiencies in case and bottle picking.

Open Sky Group, an independent consulting company specializing in warehouse management system (WMS) implementations, is has announced that it has been chosen by JDA Software as a U.S. Reseller for the JDA Warehouse Management System and other add-on applications.

The CMMS allows on-site maintenance teams to more effectively manage maintenance activities while increasing uptime and operating performance of automated materials handling systems and other infrastructure systems at the user’s site.

About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA