Institute for Supply Management non-manufacturing survey grows
The ISM Non-manufacturing Index assesses the state of non-manufacturing business in the U.S.
The Institute of Supply Management (or ISM) Purchasing Manager’s Index (or 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 Manager’s 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 Real Estate Investment Trusts (or REITs) like Boston Properties (BXP), Kilroy (KRC), Vornado (VNO), SL Green (SLG), and Highwoods (HIW) are particularly affected by the services sector.
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Services activity decelerated slightly in June in tandem with the ISM Manufacturing Index
The index showed that overall activity in the non-manufacturing sector increased for the 53rd consecutive month, but the rate of growth is decelerating. The overall index fell from 56.3 in May to 56 in June. The business activity index slipped to 57.5% and the employment index increased from 52.4 to 54.4. The ISM Manufacturing Index showed flat employment. Expansion was reported in 14 of the industries. The best-performing sectors were construction, real estate, and management or support services. Four industries reported a contraction in June. It remains to be seen how Obamacare will impact corporate cost structures going forward.
Some key quotes from the survey
- “Construction industry is extremely strong [and] business conditions look positive going forward.”—Construction
- “June occupancy was projected to be below expectation, but has actually picked up remarkably strong. June will now finish above normal.”—Accommodation and Food Services
- “Sales in many categories are improving, partially due to pent-up demand from the late arrival of spring. We believe this will carry deep into the second quarter barring any unforeseen world or economic events.”—Retail Trade