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FOR RELEASE: April 3, 2019

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

 


March 2019 Non-Manufacturing ISM® Report On Business®

NMI® at 56.1%


Business Activity Index at 57.4%

New Orders Index at 59%

Employment Index at 55.9%


(Tempe, Arizona) – Economic activity in the non-manufacturing sector grew in March for the 110th 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 56.1 percent, which is 3.6 percentage points lower than the February reading of 59.7 percent. This represents continued growth in the non-manufacturing sector, at a slower rate. The Non-Manufacturing Business Activity Index decreased to 57.4 percent, 7.3 percentage points lower than the February reading of 64.7 percent, reflecting growth for the 116th consecutive month, at a slower rate in March. The New Orders Index registered 59 percent, 6.2 percentage points lower than the reading of 65.2 percent in February. The Employment Index increased 0.7 percentage point in March to 55.9 percent from the February reading of 55.2 percent. The Prices Index increased 4.3 percentage points from the February reading of 54.4 percent to 58.7 percent, indicating that prices increased in March for the 22nd consecutive month. According to the NMI®, 16 non-manufacturing industries reported growth. The non-manufacturing sector’s growth cooled off in March after strong growth in February. Respondents remain mostly optimistic about overall business conditions and the economy. They still have underlying concerns about employment resources and capacity constraints.”

The 16 non-manufacturing industries reporting growth in March — listed in order — are: Construction; Other Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Accommodation & Food Services; Public Administration; Mining; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Real Estate, Rental & Leasing; Information; Arts, Entertainment & Recreation; Utilities; Finance & Insurance; and Wholesale Trade. The two industries that contracted in March are: Educational Services; and Retail Trade.

What respondents are saying
  • “Labor is tight and in short supply.” (Accommodation & Food Services)
  • “While we have a slowed down in residential service and install [area], we are still experiencing strength in the new commercial construction area.” (Construction)
  • “Q1 revenue in total on plan or slightly above. Some products slightly below plan. Overall, good start to 2019.” (Finance & Insurance)
  • “Supply expenses are up commensurately with business conditions as business activity has outpaced the budget on average four to six percent for our fiscal cycle that [began] 7/1/18.” (Health Care & Social Assistance)
  • “There is a sense of relief in our industry with the temporary reprieve of the additional tariffs. As of now, we feel this will help us maintain competitive prices and steady margins over the next quarter.” (Management of Companies & Support Services)
  • “Activity level held flat.” (Mining)
  • “Initial surge in business at the beginning of the year has peaked and settled to a more stable level.” (Professional, Scientific & Technical Services)
  • “Locally as construction grows, a shortage of available workers for the industry is occurring for future projects.” (Public Administration)
  • “April is when our real busy season begins and it has arrived early this year, demand is quite strong.” (Real Estate, Rental & Leasing)
  • “Labor, weather and regulatory issues have impacted operations.” (Transportation & Warehousing)

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

 Non-ManufacturingManufacturing
IndexSeries Index MarSeries Index FebPercent Point ChangeDirectionRate of ChangeTrend** (Months)Series Index MarSeries Index FebPercent Point Change
NMI®/ PMI® 56.1 59.7 -3.6 Growing Slower 110 55.3 54.2 +1.1
Business Activity/ Production 57.4 64.7 -7.3 Growing Slower 116 55.8 54.8 +1.0
New Orders 59.0 65.2 -6.2 Growing Slower 116 57.4 55.5 +1.9
Employment 55.9 55.2 +0.7 Growing Faster 61 57.5 52.3 +5.2
Supplier Deliveries 52.0 53.5 -1.5 Slowing Slower 39 54.2 54.9 -0.7
Inventories 50.0 51.0 -1.0 Unchanged From Growing 1 51.8 53.4 -1.6
Prices 58.7 54.4 +4.3 Increasing Faster 22 54.3 49.4 +4.9
Backlog of Orders 56.5 55.5 +1.0 Growing Faster 15 50.4 52.3 -1.9
New Export Orders 52.5 55.0 -2.5 Growing Slower 26 51.7 52.8 -1.1
Imports 51.5 48.5 +3.0 Growing From Contracting 1 51.1 55.3 -4.2
Inventory Sentiment 62.5 59.0 +3.5 Too High Faster 261 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 42.7 39.0 +3.7
Overall Economy Growing Slower 116
Non-Manufacturing Sector Growing Slower 110
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

Aluminum Products; Construction Subcontractors; Diesel Fuel; Gasoline; Labor (6); Labor — Construction; Labor — Temporary; Paper (2); Paper Products (2); Pharmaceuticals; and Steel Products (18).

 

Commodities Down in Price

Bacon.

 

Commodities in Short Supply

Construction Subcontractors (15); Gowns; Helium; Labor (6); Labor — Construction (36); Labor — Temporary (7); Needles & Syringes; Pharmaceuticals; and Truck Deliveries.

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


March 2019 Non-Manufacturing Index Summaries


NMI®

In March, the NMI® registered 56.1 percent, 3.6 percentage points lower than the 59.7 percent registered in February, indicating growth in the non-manufacturing sector for the 110th 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 March NMI® indicates growth for the 116th consecutive month in the overall economy and expansion in the non-manufacturing sector for the 110th consecutive month. Nieves says, “The past relationship between the NMI® and the overall economy indicates that the NMI® for March (56.1 percent) corresponds to a 2.6-percent increase in real gross domestic product (GDP) on an annualized basis.”

NMI® History

MonthNMI®
Mar 2019 56.1
Feb 2019 59.7
Jan 2019 56.7
Dec 2018 58.0
Nov 2018 60.4
Oct 2018 60.0
MonthNMI®
Sep 2018 60.8
Aug 2018 58.8
Jul 2018 56.7
Jun 2018 58.7
May 2018 58.9
Apr 2018 57.2
58.5
60.8
56.1

Business Activity

ISM®’s Business Activity Index registered 57.4 percent in March, a decrease of 7.3 percentage points from the February reading of 64.7 percent. This represents growth in business activity for the 116th consecutive month. Twelve industries reported increased business activity. Comments from respondents include: “Some leveling off end of last month and this month” and “Marginally lower, but above budget.”

The 12 industries reporting growth of business activity in March — listed in order — are: Construction; Accommodation & Food Services; Other Services; Arts, Entertainment & Recreation; Utilities; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Information; Public Administration; Mining; and Management of Companies & Support Services. The four industries reporting a decrease in March are: Educational Services; Retail Trade; Wholesale Trade; and Finance & Insurance.

Business Activity% Higher% Same% LowerIndex
Mar 2019 33 52 15 57.4
Feb 2019 39 51 10 64.7
Jan 2019 33 43 24 59.7
Dec 2018 32 50 18 61.2

New Orders

ISM®’s Non-Manufacturing New Orders Index registered 59 percent, a decrease of 6.2 percentage points from the February reading of 65.2 percent. New orders grew in March for the 116th consecutive month, at a substantially slower rate compared with February. Comments from respondents include: “Recovering from the pre buying during tariffs and Chinese New Year” and “Previous month was an abnormally high volume.”

The 12 industries reporting growth of new orders in March — listed in order — are: Other Services; Construction; Accommodation & Food Services; Health Care & Social Assistance; Information; Utilities; Professional, Scientific & Technical Services; Management of Companies & Support Services; Public Administration; Mining; Transportation & Warehousing; and Finance & Insurance. The three industries reporting contraction in March are: Educational Services; Wholesale Trade; and Retail Trade.

New Orders% Higher% Same% LowerIndex
Mar 2019 33 53 14 59.0
Feb 2019 38 52 10 65.2
Jan 2019 28 51 21 57.7
Dec 2018 35 50 15 62.7

Employment

Employment activity in the non-manufacturing sector grew in March for the 61st consecutive month. ISM®’s Non-Manufacturing Employment Index registered 55.9 percent, an increase of 0.7 percentage point from the February reading of 55.2 percent. Twelve industries reported increased employment, and four industries reported decreased employment. Comments from respondents include: “Staffing up as business grows” and “Difficulty recruiting in a full employment environment.”

The 12 industries reporting an increase in employment in March — listed in order — are: Real Estate, Rental & Leasing; Construction; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Educational Services; Wholesale Trade; Health Care & Social Assistance; Management of Companies & Support Services; Public Administration; Mining; Transportation & Warehousing; and Other Services. The four industries reporting a reduction in employment in March are: Utilities; Retail Trade; Information; and Finance & Insurance.

Employment% Higher% Same% LowerIndex
Mar 2019 25 62 13 55.9
Feb 2019 21 66 13 55.2
Jan 2019 22 65 13 57.8
Dec 2018 26 60 14 56.6

Supplier Deliveries

Supplier deliveries were slower in March for the 39th consecutive month. The index registered 52 percent, which is 1.5 percentage points lower than the 53.5 percent registered in February. This indicates that deliveries are slowing at slower rate in March as compared with February. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “We are working with our vendors to address backlogs ahead of time before they become an issue. This seems to be working” and “Truck and rail running slow due to weather.”

The nine industries reporting slower deliveries in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Health Care & Social Assistance; Retail Trade; Finance & Insurance; Construction; Professional, Scientific & Technical Services; Public Administration; and Wholesale Trade. The three industries reporting faster deliveries in March are: Accommodation & Food Services; Transportation & Warehousing; and Information. Six industries reported no change in supplier deliveries in March as compared to February.

Supplier Deliveries% Slower% Same% FasterIndex
Mar 2019 9 86 5 52.0
Feb 2019 11 85 4 53.5
Jan 2019 10 83 7 51.5
Dec 2018 13 77 10 51.5

Inventories*

ISM®’s Non-Manufacturing Inventories Index is unchanged in March after a month of growth, registering 50 percent, which is 1 percentage point lower than the 51 percent that was reported in February. Of the total respondents in March, 33 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Not adding inventory to meet new orders. All material coming from suppliers” and “Reducing inventory to be more in line with sales.”

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

Inventories% Higher% Same% LowerIndex
Mar 2019 19 62 19 50.0
Feb 2019 20 62 18 51.0
Jan 2019 22 54 24 49.0
Dec 2018 20 63 17 51.5

Prices*

Prices paid by non-manufacturing organizations for materials and services increased in March for the 22nd consecutive month. ISM®’s Non-Manufacturing Prices Index registered 58.7 percent, 4.3 percentage points higher than the 54.4 percent reported in February. Twenty-one percent of respondents reported higher prices, 77 percent indicated no change in prices paid, and 2 percent of respondents reported lower prices.

Thirteen non-manufacturing industries reported an increase in prices paid during the month of March, listed in the following order: Other Services; Construction; Information; Public Administration; Wholesale Trade; Educational Services; Mining; Transportation & Warehousing; Finance & Insurance; Utilities; Health Care & Social Assistance; Management of Companies & Support Services; and Professional, Scientific & Technical Services. The only non-manufacturing industry reporting a decrease in prices paid during the month of March is Agriculture, Forestry, Fishing & Hunting.

Prices% Higher% Same% LowerIndex
Mar 2019 21 77 2 58.7
Feb 2019 18 74 8 54.4
Jan 2019 25 67 8 59.4
Dec 2018 18 74 8 58.0
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 grew in March. The index registered 56.5 percent, which is 1 percentage point higher than the 55.5 percent reported in February. Of the total respondents in March, 37 percent indicated they do not measure backlog of orders.

The nine industries reporting an increase in order backlogs in March — listed in order — are: Accommodation & Food Services; Health Care & Social Assistance; Transportation & Warehousing; Professional, Scientific & Technical Services; Utilities; Public Administration; Other Services; Construction; and Mining. The five industries that reported a decrease in backlogs in March are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Wholesale Trade; Retail Trade; and Information.

Backlog of Orders% Higher% Same% LowerIndex
Mar 2019 22 69 9 56.5
Feb 2019 24 63 13 55.5
Jan 2019 20 65 15 52.5
Dec 2018 20 61 19 50.5

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 for the 26th consecutive month. The New Export Orders Index registered 52.5 percent in March which is 2.5 percentage points lower than the 55 percent that was reported in February. Of the total respondents in March, 59 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 March — listed in order — are: Real Estate, Rental & Leasing; Information; Construction; Finance & Insurance; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Wholesale Trade. The five industries reporting a decrease in exports for the month of March are: Management of Companies & Support Services; Other Services; Retail Trade; Mining; and Agriculture, Forestry, Fishing & Hunting.

New Export Orders% Higher% Same% LowerIndex
Mar 2019 18 69 13 52.5
Feb 2019 17 76 7 55.0
Jan 2019 15 71 14 50.5
Dec 2018 22 75 3 59.5

Imports

The Imports Index grew in March after a month of contraction. The reading of 51.5 percent is 3 percentage points higher than the 48.5 percent reported in February. Fifty-three percent of respondents reported that they do not use, or do not track the use of, imported materials.

The five industries reporting an increase in imports for the month of March are: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Information; Finance & Insurance; and Professional, Scientific & Technical Services. The four industries reporting a decrease in imports in the month of March are: Other Services; Construction; Retail Trade; and Wholesale Trade. Seven industries reported no change in imports in March as compared to February.

Imports% Higher% Same% LowerIndex
Mar 2019 13 77 10 51.5
Feb 2019 8 81 11 48.5
Jan 2019 12 80 8 52.0
Dec 2018 15 77 8 53.5

Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in March registered 62.5 percent, which is 3.5 percentage points higher than the 59 percent that was reported in February. This indicates that respondents believe their inventories are still too high. In March, 27 percent of respondents said their inventories were too high, 2 percent of the respondents said their inventories were too low, and 71 percent said their inventories were about right.

The 11 industries reporting a feeling that their inventories were too high in March — listed in order — are: Other Services; Wholesale Trade; Information; Agriculture, Forestry, Fishing & Hunting; Construction; Public Administration; Utilities; Health Care & Social Assistance; Mining; Retail Trade; and Finance & Insurance. The only industry reporting a feeling that their inventories were too low in March is Transportation & Warehousing.

Inventory Sentiment% Too High% About Right% Too LowIndex
Mar 2019 27 71 2 62.5
Feb 2019 24 70 6 59.0
Jan 2019 26 69 5 60.5
Dec 2018 22 74 4 59.0

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 March 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 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.

The full text version of the Non-Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET.

The next Non-Manufacturing ISM® Report On Business® featuring the April 2019 data will be released at 10:00 a.m. ET on Friday, May 3, 2019.

*Unless the New York Stock Exchange is closed.



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