The ISM Services index pulls back but still shows expansion
The Institute of Supply Management non-manufacturing index assesses the state of non-manufacturing business in the United States
The Institute of Supply Management (ISM) Purchasing Manager’s Index (PMI) is similar to the other regional PMI indices, but it covers the entire country. It’s the sister index to the ISM Manufacturing Purchasing Managers Index. The non-manufacturing ISM looks at various business indices, like new orders, production, employment, supplier deliveries, inventory, customer inventories, prices, backlog, exports and imports, and capital expenditures. A reading over 50 means the sector in question is generally expanding. Office REITs like Boston Properties (BXP), Kilroy (KRC), Vornado (VNO), S.L. Green (SLG), and Highwoods (HIW) are particularly affected by the services sector.
Interested in BXP? Don't miss the next report.
Receive e-mail alerts for new research on BXP
Services activity pulled back in December in tandem with the ISM manufacturing index
The index showed that overall activity in the non-manufacturing sector increased for the 48th consecutive month but the pace of growth is decelerating. The manufacturing sector is outperforming the services sector. The overall index fell from 53.9 in November to 53 in December. The business activity index hit 55.2% and the employment index jumped from 52.5 to 55.8. The jump in employment was encouraging. Half the industries reported expansion. The best-performing sectors were management, retail, and finance. Mining, arts, entertainment and recreation, and education performed the worst. The elephant in the room of course will remain Obamacare and how it impacts corporate cost structures going forward.
Some key quotes from the survey:
- “Hiring activity seems to remain steady at mid- to senior-level management positions. However, it is uncertain what impact the Affordable Healthcare Act will have on hiring and full-time status in 2014 as more companies are re-evaluating their healthcare benefits strategies for all positions.” (Management of Companies & Support Services)
- “Business is steady. We are at year-end and the holidays, so it’s a little quiet. Expect things to pick up after the first [of the year].” (Construction)
- “Overall, we are still seeing the pickup in business which began in the 3rd quarter.” (Wholesale Trade)