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FOR RELEASE: December 4, 2019

Contact:   Kristina Cahill
Report On Business® Analyst
ISM®, ROB/Research Manager
Tempe, Arizona
480-752-6276, Ext. 3015
E-mail: kcahill@instituteforsupplymanagement.org

 


November 2019 Non-Manufacturing ISM® Report On Business®

NMI® at 53.9%


GDP Growing at 1.9%


Business Activity Index at 51.6%

New Orders Index at 57.1%

Employment Index at 55.5%


(Tempe, Arizona) – Economic activity in the non-manufacturing sector grew in November for the 118th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM®Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: “The NMI® registered 53.9 percent, which is 0.8 percentage points lower than the October reading of 54.7 percent. This represents continued growth in the non-manufacturing sector, at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 51.6 percent, 5.4 percentage points lower than the October reading of 57 percent, reflecting growth for the 124th consecutive month. The New Orders Index registered 57.1 percent; 1.5 percentage points higher than the reading of 55.6 percent in October. The Employment Index increased 1.8 percentage points in November to 55.5 percent from the October reading of 53.7 percent. The Prices Index increased 1.9 percentage points from the October reading of 56.6 percent to 58.5 percent, indicating that prices increased in November for the 30th consecutive month. According to the NMI®, 12 non-manufacturing industries reported growth. The non-manufacturing sector had a slight pullback in November. The respondents hope for a resolution on tariffs and continue to be hampered by constraints in labor resources.”

INDUSTRY PERFORMANCE

The 12 non-manufacturing industries reporting growth in November — listed in order — are: Real Estate, Rental & Leasing; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; Finance & Insurance; Transportation & Warehousing; Management of Companies & Support Services; Information; Utilities; Professional, Scientific & Technical Services; and Public Administration. The five industries reporting a decrease are: Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; Construction; and Other Services.

WHAT RESPONDENTS ARE SAYING
  • “Generally sluggish demand in the past month; back to summertime levels.” (Agriculture, Forestry, Fishing & Hunting)
  • “Activity is still up in all areas, but primarily in commercial construction.” (Construction)
  • “No significant changes in business conditions. Closing out current projects and initiatives. Preparing for year-end and the beginning of 2020.” (Finance & Insurance)
  • “Lower reimbursement rates will continue to affect funding levels.” (Health Care & Social Assistance)
  • “Tariffs are impacting prices for a broad array of products used in the delivery of services and completion of projects for our clients. Upward pressure is impacting suppliers and their pricing to customers. We are seeing no relief from our customers, so we’re being negatively impacted by tariff-driven price increases. Numerous suppliers report looking for alternative manufacturing/supply locations outside of China, but with limited or no success so far.” (Management of Companies & Support Services)
  • “Tariffs on steel and aluminum are still having a negative impact on costs. Oil and gas business is increasing, which is favorably impacting our orders.” (Other Services)
  • “We’re optimistic [because the] economy appears to be on autopilot, despite all the political distractions. Stock market seems invincible, [and the] trade war with China appears to be in a stalemate. Job growth appears to be reaching an equilibrium point. Final economic demand appears strong, with positive spend forecast for the holidays.” (Professional, Scientific & Technical Services)
  • “Business activity is lower after the end of the 2019 fiscal year. The federal government is under a continuing resolution appropriations bill. This means we have not received a full annual budget, and all spending is restricted to past operational budgets for only necessary items.” (Public Administration)
  • “Fourth-quarter seasonal retail volume increase is affecting labor hours, temporary labor demand and availability of short-term rental trailers to compensate for overflow.” (Transportation & Warehousing)

ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS*

 Non-ManufacturingManufacturing
IndexSeries Index NovSeries Index OctPercent Point ChangeDirectionRate of ChangeTrend** (Months)Series Index NovSeries Index OctPercent Point Change
NMI®/ PMI® 53.9 54.7 -0.8 Growing Slower 118 48.1 48.3 -0.2
Business Activity/ Production 51.6 57.0 -5.4 Growing Slower 124 49.1 46.2 +2.9
New Orders 57.1 55.6 +1.5 Growing Faster 124 47.2 49.1 -1.9
Employment 55.5 53.7 +1.8 Growing Faster 69 46.6 47.7 -1.1
Supplier Deliveries 51.5 52.5 -1.0 Slowing Slower 6 52.0 49.5 +2.5
Inventories 50.5 50.5 0.0 Growing Same 4 45.5 48.9 -3.4
Prices 58.5 56.6 +1.9 Increasing Faster 30 46.7 45.5 +1.2
Backlog of Orders 48.5 48.5 0.0 Contracting Same 2 43.0 44.1 -1.1
New Export Orders 52.0 50.0 +2.0 Growing From Unchanged 1 47.9 50.4 -2.5
Imports 45.0 48.5 -3.5 Contracting Faster 3 48.3 45.3 +3.0
Inventory Sentiment 58.5 57.0 +1.5 Too High Faster 269 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 45.0 47.8 -2.8
Overall Economy Growing Slower 124
Non-Manufacturing Sector Growing Slower 118
Non-Manufacturing ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries Indexes.
*Number of months moving in current direction.

Commodities reported up/down in price and in short supply


Commodities Up in Price

Bacon; Cheese (3); Cheese Products; Electrical Components (2); Lettuce; and Lumber Products (2).

 

Commodities Down in Price

Steel Products (5).

 

Commodities in Short Supply

Construction Contractors; Construction Subcontractors (23); IV Solutions (2); Labor (14); Labor — Construction (44); Labor — Temporary (5); and Pharmaceuticals (3).

Note: The number of consecutive months the commodity is listed is indicated after each item.


November 2019 Non-Manufacturing Index Summaries


In November, the NMI® registered 53.9 percent, 0.8 percentage point lower than the 54.7 percent in October. The non-manufacturing sector grew for the 118th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

An NMI® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the November NMI® indicates growth for the 124th consecutive month in the overall economy and expansion in the non-manufacturing sector for the 118th consecutive month. Nieves says, “The past relationship between the NMI® and the overall economy indicates that the NMI® for November (53.9 percent) corresponds to a 1.9-percent increase in real gross domestic product (GDP) on an annualized basis.”

NMI® History

MonthNMI®
Nov 2019 53.9
Oct 2019 54.7
Sep 2019 52.6
Aug 2019 56.4
Jul 2019 53.7
Jun 2019 55.1
MonthNMI®
May 2019 56.9
Apr 2019 55.5
Mar 2019 56.1
Feb 2019 59.7
Jan 2019 56.7
Dec 2018 58.0
55.8
59.7
52.6

Business Activity

ISM®’s Business Activity Index registered 51.6 percent in November, a substantial decrease of 5.4 percentage points from the October reading of 57 percent. This represents growth in business activity for the 124th consecutive month. Nine industries reported increased business activity. Comments from respondents include: “Major projects are nearing completion” and “Ramping into Q4 holiday season and new product launch.”

The nine industries reporting growth of business activity in November — listed in order — are: Real Estate, Rental & Leasing; Health Care & Social Assistance; Arts, Entertainment & Recreation; Utilities; Finance & Insurance; Management of Companies & Support Services; Accommodation & Food Services; Retail Trade; and Information. The seven industries reporting a decrease in business activity for the month of November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Construction; Mining; Public Administration; Wholesale Trade; and Professional, Scientific & Technical Services.

Business Activity% Higher% Same% LowerIndex
Nov 2019 24 56 20 51.6
Oct 2019 30 52 18 57.0
Sep 2019 27 60 13 55.2
Aug 2019 32 57 11 61.5

ISM®’s Non-Manufacturing New Orders Index registered 57.1 percent, an increase of 1.5 percentage points from the October reading of 55.6 percent. New orders grew for the 124th consecutive month, at a faster rate compared with October. Comments from respondents include: “Business growth associated with new clients” and “People want to spend their budgets by the end of the year.”

The 12 industries reporting growth of new orders in November — listed in order — are: Real Estate, Rental & Leasing; Retail Trade; Health Care & Social Assistance; Information; Transportation & Warehousing; Finance & Insurance; Utilities; Management of Companies & Support Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Construction; and Public Administration. The four industries reporting contraction in November are: Agriculture, Forestry, Fishing & Hunting; Mining; Other Services; and Wholesale Trade.

New Orders% Higher% Same% LowerIndex
Nov 2019 28 57 15 57.1
Oct 2019 26 56 18 55.6
Sep 2019 28 56 16 53.7
Aug 2019 31 57 12 60.3

Employment activity in the non-manufacturing sector grew in November for the 69th consecutive month. ISM®’s Non-Manufacturing Employment Index registered 55.5 percent, an increase of 1.8 percentage points from the October reading of 53.7 percent. Thirteen industries reported increased employment, and four industries reported decreased employment. Comments from respondents include: “We are in a workforce crisis, unable to attract and/or retain workers” and “Hiring more personnel to support operations.”

The 13 industries reporting an increase in employment in November — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Other Services; Health Care & Social Assistance; Utilities; Finance & Insurance; Accommodation & Food Services; Transportation & Warehousing; Retail Trade; Public Administration; Professional, Scientific & Technical Services; and Management of Companies & Support Services. The four industries reporting a reduction in employment in November are: Information; Mining; Wholesale Trade; and Construction.

Employment% Higher% Same% LowerIndex
Nov 2019 21 66 13 55.5
Oct 2019 22 65 13 53.7
Sep 2019 21 60 19 50.4
Aug 2019 22 60 18 53.1

Supplier Deliveries

The Supplier Deliveries Index registered 51.5 percent, which is 1 percentage point lower than the 52.5 percent reported in October. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Steady; no supplier related delays” and “Improved logistical coordination with suppliers in the third quarter (has resulted in) gains in Q4.”

The nine industries reporting slower deliveries in November — listed in order — are: Information; Mining; Accommodation & Food Services; Transportation & Warehousing; Management of Companies & Support Services; Public Administration; Wholesale Trade; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The four industries reporting faster deliveries in November are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Utilities; and Retail Trade.

Supplier Deliveries% Slower% Same% FasterIndex
Nov 2019 8 87 5 51.5
Oct 2019 8 89 3 52.5
Sep 2019 8 86 6 51.0
Aug 2019 5 91 4 50.5

Inventories*

ISM®’s Non-Manufacturing Inventories Index grew in November, registering 50.5 percent, which is the same percentage that was reported in October. Of the total respondents in November, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Concerted effort to drive inventory lower” and “Adjusting to match decreased demand.”

The 11 industries reporting an increase in inventories in November — listed in order — are: Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Other Services; Mining; Health Care & Social Assistance; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Accommodation & Food Services; and Information. The five industries reporting a decrease in inventories in November are: Utilities; Wholesale Trade; Management of Companies & Support Services; Construction; and Public Administration.

Inventories% Higher% Same% LowerIndex
Nov 2019 20 61 19 50.5
Oct 2019 19 63 18 50.5
Sep 2019 20 66 14 53.0
Aug 2019 22 66 12 55.0

Prices paid by non-manufacturing organizations for materials and services increased in November for the 30th consecutive month. ISM®’s Non-Manufacturing Prices Index registered 58.5 percent; 1.9 percentage points higher than the 56.6 percent reported in October.

The 10 non-manufacturing industries reported an increase in prices paid during the month of November — listed in order — are: Management of Companies & Support Services; Wholesale Trade; Public Administration; Health Care & Social Assistance; Utilities; Other Services; Accommodation & Food Services; Construction; Retail Trade; and Professional, Scientific & Technical Services. The four industries that reported a decrease in prices in November are: Real Estate, Rental & Leasing; Mining; Information; and Finance & Insurance.

Prices% Higher% Same% LowerIndex
Nov 2019 18 76 6 58.5
Oct 2019 19 74 7 56.6
Sep 2019 24 70 6 60.0
Aug 2019 20 74 6 58.2
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders

ISM®’s Non-Manufacturing Backlog of Orders Index contracted in November for the third time in the last four months. The index registered 48.5 percent, which is the same percentage reported in October. Of the total respondents in November, 36 percent indicated they do not measure backlog of orders.

The four industries reporting an increase in order backlogs in November are: Real Estate, Rental & Leasing; Accommodation & Food Services; Health Care & Social Assistance; and Finance & Insurance. The nine industries that reported a decrease in backlogs in November — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Information; Wholesale Trade; Other Services; Mining; Construction; and Public Administration.

Backlog of Orders% Higher% Same% LowerIndex
Nov 2019 14 69 17 48.5
Oct 2019 14 69 17 48.5
Sep 2019 18 72 10 54.0
Aug 2019 12 74 14 49.0

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based personnel grew in November after a month of being unchanged. The New Export Orders Index registered 52 percent in November, which is 2 percentage points higher than the 50 percent reported in October. Of the total respondents in November, 61 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The seven industries reporting an increase in new export orders in November are: Real Estate, Rental & Leasing; Accommodation & Food Services; Retail Trade; Construction; Finance & Insurance; Information; and Wholesale Trade. The six industries that reported a decrease in exports in November are: Utilities; Arts, Entertainment & Recreation; Educational Services; Other Services; Management of Companies & Support Services; and Professional, Scientific & Technical Services.

New Export Orders% Higher% Same% LowerIndex
Nov 2019 13 78 9 52.0
Oct 2019 8 84 8 50.0
Sep 2019 11 82 7 52.0
Aug 2019 11 79 10 50.5

The Imports Index contracted for the third consecutive month, registering 45 percent in November, 3.5 percentage points lower than October’s figure of 48.5 percent. Fifty-four percent of respondents reported that they do not use, or do not track the use of, imported materials.

The only industry reporting an increase in imports for the month of November is Accommodation & Food Services. The nine industries that reported a decrease in imports in are: Arts, Entertainment & Recreation; Retail Trade; Other Services; Mining; Construction; Transportation & Warehousing; Wholesale Trade; Professional, Scientific & Technical Services; and Information. Eight industries reported no change in imports in November as compared to October.

Imports% Higher% Same% LowerIndex
Nov 2019 3 84 13 45.0
Oct 2019 5 87 8 48.5
Sep 2019 9 80 11 49.0
Aug 2019 11 79 10 50.5

Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in November registered 58.5 percent, 1.5 percentage points higher than the 57 percent reading in October. This indicates that respondents believe their inventories are still too high.

The eight industries reporting sentiment that their inventories were too high in November — listed in order — are: Retail Trade; Utilities; Management of Companies & Support Services; Wholesale Trade; Information; Accommodation & Food Services; Health Care & Social Assistance; and Public Administration. The three industries reporting a feeling that their inventories were too low in November are: Arts, Entertainment & Recreation; Educational Services; and Professional, Scientific & Technical Services. Seven industries reported no change in inventory sentiment.

Inventory Sentiment% Too High% About Right% Too LowIndex
Nov 2019 23 71 6 58.5
Oct 2019 20 74 6 57.0
Sep 2019 20 76 4 58.0
Aug 2019 17 78 5 56.0

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of November 2019.

The data presented herein is obtained from a survey of non-manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Non-Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Non-Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Non-Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The NMI® (Non-Manufacturing Index) is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the non-manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

An NMI® above 48.6 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.6 percent, it is generally declining. The distance from 50 percent or 48.6 percent is indicative of the strength of the expansion or decline.

The Non-Manufacturing ISM® Report On Business® survey is sent out to Non-Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Non-Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the ISM Mastery Model®. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

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The next Non-Manufacturing ISM® Report On Business® featuring the December 2019 data will be released at 10:00 a.m. ET on Tuesday, January 7, 2020.

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