ISM Non Manufacturing: Cooling As Supply Chains Recover From Hurricane
December 5, 2017
Bottom Line: After sharp gains in September and October, the survey of activity in the services, construction, and government sectors of the economy suggested business decelerated modestly in November. New orders fell as inventories rose, suggesting some further moderation in the pace of gains is likely going forward as businesses re-adjust following the hurricane disruptions and following order influx. That said, overall growth remains moderate with 16 of 17 sectors reporting growth.
The ISM Non-Manufacturing Index FELL by 2.7 points in November to 57.4%, compared with market expectations for a decline to 59.0%.
The November reading was still slightly higher than its average level over the past 12 months. The current level of the index indicates that the economy is growing moderately.
- New Orders fell by -4.1 points to 58.7%.
- Order Backlogs declined modestly and Inventories increased modestly.
- Employment fell by 2.2 points to 55.3% , indicating that upcoming employment report will likely be lower than last month's print.
- Prices fell by 2.0 points to 60.7%.
Quotes from Survey Respondents:
- "Domestic business is strong, with positive growth indicators for 2018 from both internal sources and client feedback." (Management of Companies & Support Services)
- "Construction labor continues to be constrained in the West." (Construction)
- "Steady; no material changes." (Finance & Insurance)
- "We continue to struggle with understanding the [potential] changes to the Affordable Care Act, and are trying to be flexible in how we respond. Also, Hurricane Maria has affected some of our pharmaceutical supplies." (Health Care & Social Assistance)
- "Mixed bag of goods for November 2017. Typical seasonal increases for specific braising cuts of beef as the holidays approach. Some volatility on produce items such as brussel sprouts. Expect cream to spike due to holiday season." (Accommodation & Food Services)
- "Business seems to be leveling off. Attribute this to the holiday season that is approaching." (Professional, Scientific & Technical Services)
- "Business is strong, but not as strong as Q3." (Retail Trade)
- "Bookings would suggest a strong run to the end of the year." (Wholesale Trade)
Article by Contingent Macro Advisors