Print Share Home



April 2018 Non-Manufacturing ISM® Report On Business®

FOR RELEASE: May 3, 2018

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




NMI® at 56.8%

Business Activity Index at 59.1%
New Orders Index at 60%
Employment Index at 53.6%

 

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in April for the 99th 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 56.8 percent, which is 2 percentage points lower than the March reading of 58.8 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 59.1 percent, 1.5 percentage points lower than the March reading of 60.6 percent, reflecting growth for the 105th consecutive month, at a slower rate in April. The New Orders Index registered 60 percent, 0.5 percentage point higher than the reading of 59.5 percent in March. The Employment Index decreased 3 percentage points in April to 53.6 percent from the March reading of 56.6 percent. The Prices Index increased by 0.3 percentage point from the March reading of 61.5 percent to 61.8 percent, indicating that prices increased in April for the 26th consecutive month. According to the NMI®, all 18 non-manufacturing industries reported growth. There was a slowing in the rate of growth that was mostly attributed to the decline in the Employment and Supplier Deliveries indexes. The respondents have expressed concern regarding the uncertainty about tariffs and the effect on the cost of goods. Overall, the respondents remain positive about business conditions and the economy."

 

INDUSTRY PERFORMANCE

All 18 non-manufacturing industries reported growth in April, listed in order: Mining; Utilities; Retail Trade; Educational Services; Wholesale Trade; Construction; Transportation & Warehousing; Public Administration; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Finance & Insurance; Other Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Information; and Health Care & Social Assistance.

 

WHAT RESPONDENTS ARE SAYING

  • "National shortage of Class-A drivers and the increased demand for logistics is resulting in an increase in the cost of goods." (Accommodation & Food Services)
  • “The trade tensions are impacting purchasing of steel and are causing suppliers to send letters of concern regarding contracted purchases for this year and the future based on these proposed tariffs.” (Construction)
  • “Economy is humming along. [Activity in] both residential and commercial construction [is] apparent. Agriculture sector seems to be moderating at these commodity price levels. The international trade situation appears to be shifting on a minute-by-minute basis, which has folks nervous.” (Finance & Insurance)
  • “Continued shortage of drugs and products manufactured in Puerto Rico.” (Health Care & Social Assistance)
  • “Tax reform windfall continues to help business conditions.” (Management of Companies & Support Services)
  • “Steel tariffs/232 have impacted our steel costs (pipes, fittings, valves, vessels [and the like]).” (Mining)
  • “Some indicators of rising transportation costs, which will eventually affect product prices. Trade tariffs will cause unintended consequences on all industries, affecting production and non-production commodities.” (Professional, Scientific & Technical Services)
  • “Construction activity continues to remain strong in the region, resulting in capacity issues and shortages of labor, materials and subcontractors.” (Public Administration)
  • “Outlook is very promising as we approach a seasonal uptrend in business.” (Wholesale Trade)
ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS*
APRIL 2018
 Non-ManufacturingManufacturing
Index Series
Index
Apr
Series
Index
Mar
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Apr
Series
Index
Mar
Percent
Point
Change
NMI®/PMI® 56.8 58.8 -2.0 Growing Slower 99 57.3 59.3 -2.0
Business Activity/Production 59.1 60.6 -1.5 Growing Slower 105 57.2 61.0 -3.8
New Orders 60.0 59.5 +0.5 Growing Faster 87 61.2 61.9 -0.7
Employment 53.6 56.6 -3.0 Growing Slower 50 54.2 57.3 -3.1
Supplier Deliveries 54.5 58.5 -4.0 Slowing Slower 28 61.1 60.6 +0.5
Inventories 57.0 53.5 +3.5 Growing Faster 3 52.9 55.5 -2.6
Prices 61.8 61.5 +0.3 Increasing Faster 26 79.3 78.1 +1.2
Backlog of Orders 52.0 56.5 -4.5 Growing Slower 4 62.0 59.8 +2.2
New Export Orders 61.5 58.0 +3.5 Growing Faster 15 57.7 58.7 -1.0
Imports 54.5 55.0 -0.5 Growing Slower 2 57.8 59.7 -1.9
Inventory Sentiment 60.0 58.5 +1.5 Too High Faster 251 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 44.3 42.0 +2.3
Overall Economy Growing Slower 104
Non-Manufacturing Sector Growing Slower 99

*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.

**Number of months moving in current direction.


COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

 

Commodities Up in Price

Aluminum Products; Corrugated Boxes; Diesel; Freight Charges (3); Fuel; Gasoline; Pharmaceuticals; Roofing Products; Steel; Steel Products (7); and Transportation Costs.

 

Commodities Down in Price

Beef; Eggs; and Soybean Oil.

 

Commodities in Short Supply

Construction Subcontractors (4); IV Solutions (9); Labor — Construction (25); Printed Circuit Board Assemblies; and Trucking Services.

 

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

 


APRIL 2018 NON-MANUFACTURING INDEX SUMMARIES


NMI®

In April, the NMI® registered 56.8 percent, 2 percentage points lower than the 58.8 percent registered in March, indicating continued growth in the non-manufacturing sector for the 99th 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 49 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the April NMI® indicates growth for the 104th consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 99th consecutive month. Nieves says, “The past relationship between the NMI® and the overall economy indicates that the NMI® for April (56.8 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis.”

NMI® HISTORY
MonthNMI®MonthNMI®
Apr 2018   56.8 Oct 2017   59.8
Mar 2018   58.8 Sep 2017   59.4
Feb 2018   59.5 Aug 2017   55.2
Jan 2018   59.9 Jul 2017   54.3
Dec 2017   56.0 Jun 2017   57.2
Nov 2017   57.3 May 2017   57.1
Average for 12 months – 57.6
High – 59.9
Low – 54.3


Business Activity

ISM®’s Business Activity Index registered 59.1 percent in April, a decrease of 1.5 percentage point from the March reading of 60.6 percent. This represents growth in business activity for the 105th consecutive month. Fifteen industries reported increased business activity, and no industry reported decreased activity for the month of April. Comments from respondents include: “Business is picking up” and “Overall level of economic activity is driving our business volumes to record levels.”

 

The 15 industries reporting growth of business activity in April — listed in order — are: Mining; Utilities; Educational Services; Transportation & Warehousing; Arts, Entertainment & Recreation; Retail Trade; Public Administration; Wholesale Trade; Construction; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Finance & Insurance; Information; Other Services; and Professional, Scientific & Technical Services. No industries reported a decrease in business activity in April.

 


Business Activity
%
Higher
%
Same
%
Lower

Index
Apr 2018 37 54 9 59.1
Mar 2018 35 55 10 60.6
Feb 2018 36 51 13 62.8
Jan 2018 31 48 21 59.8


New Orders

ISM®’s Non-Manufacturing New Orders Index registered 60 percent, an increase of 0.5 percentage point from the March reading of 59.5 percent. April represents growth in new orders for the 87th consecutive month, at a faster rate compared with March. Comments from respondents include: “More capital expenditures being released” and “[Our volume is elevating this month due to] a handful of large clients onboarding or existing clients adding new work.”

 

The 16 industries reporting growth of new orders in April — listed in order — are: Utilities; Mining; Educational Services; Transportation & Warehousing; Retail Trade; Construction; Public Administration; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Finance & Insurance; Accommodation & Food Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Information. No industries reported a decrease in new orders for the month of April.

 


New Orders
%
Higher
%
Same
%
Lower

Index
Apr 2018 36 57 7 60.0
Mar 2018 31 58 11 59.5
Feb 2018 36 53 11 64.8
Jan 2018 32 50 18 62.7


Employment

Employment activity in the non-manufacturing sector grew in April for the 50th consecutive month. ISM®’s Non-Manufacturing Employment Index registered 53.6 percent, which reflects a decrease of 3 percentage points when compared to the March reading of 56.6 percent. Ten industries reported increased employment, and one industry reported decreased employment. Comments from respondents include: “Competition for labor” and “Higher overall activity levels are requiring some targeted hiring of personnel.”

 

The 10 industries reporting an increase in employment in April — listed in order — are: Mining; Other Services; Retail Trade; Wholesale Trade; Real Estate, Rental & Leasing; Public Administration; Construction; Management of Companies & Support Services; Finance & Insurance; and Professional, Scientific & Technical Services. The only industry reporting a reduction in employment in April is Accommodation & Food Services.

 


Employment
%
Higher
%
Same
%
Lower

Index
Apr 2018 24 63 13 53.6
Mar 2018 26 61 13 56.6
Feb 2018 22 64 14 55.0
Jan 2018 26 62 12 61.6


Supplier Deliveries

Supplier deliveries were slower in April for the 28th consecutive month. The index registered 54.5 percent, which is 4 percentage points lower than the 58.5 percent registered in March. This indicates that deliveries are slowing at a slower rate in April. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Shortage of Class-A drivers” and “Poor trucking and rail conditions.”

 

The seven industries reporting slower deliveries in April — listed in order — are: Mining; Accommodation & Food Services; Wholesale Trade; Construction; Transportation & Warehousing; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The only industry reporting faster deliveries in April is Information. Ten industries reported no change in April compared to March.

 


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Apr 2018 11 87 2 54.5
Mar 2018 18 81 1 58.5
Feb 2018 14 83 3 55.5
Jan 2018 17 77 6 55.5


Inventories

ISM®’s Non-Manufacturing Inventories Index grew in April for the third consecutive month, registering 57 percent, which is 3.5 percentage points greater than the 53.5 percent reported in March. Of the total respondents in April, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “With the volume of manufacturer backorders, we had to increase our safety stock” and “Slight uptick to meet the new demand for customer orders.”

 

The nine industries reporting an increase in inventories in April — listed in order — are: Public Administration; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Utilities; Mining; Retail Trade; Construction; Wholesale Trade; and Accommodation & Food Services. The only industry reporting a decrease in inventories in April is Information.

 


Inventories
%
Higher
%
Same
%
Lower

Index
Apr 2018 26 62 12 57.0
Mar 2018 26 55 19 53.5
Feb 2018 26 55 19 53.5
Jan 2018 19 60 21 49.0


Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in April for the 26th consecutive month. ISM®’s Non-Manufacturing Prices Index registered 61.8 percent, 0.3 percentage point higher than the 61.5 percent reported in March. Thirty-three percent of respondents reported higher prices, 63 percent indicated no change in prices paid and 4 percent of respondents reported lower prices.

 

The 14 non-manufacturing industries reporting an increase in prices paid during the month of April — listed in order — are: Mining; Construction; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Public Administration; Other Services; Management of Companies & Support Services; Information; Professional, Scientific & Technical Services; Health Care & Social Assistance; Real Estate, Rental & Leasing; Finance & Insurance; and Accommodation & Food Services. No industries reported a decrease in prices in April compared to March.

 


Prices
%
Higher
%
Same
%
Lower

Index
Apr 2018 33 63 4 61.8
Mar 2018 30 66 4 61.5
Feb 2018 30 64 6 61.0
Jan 2018 26 70 4 61.9

 

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 grew in April. The index registered 52 percent, which is 4.5 percentage points lower than the 56.5 percent reported in March. Of the total respondents in April, 38 percent indicated they do not measure backlog of orders.

 

The four industries reporting an increase in order backlogs in April are: Finance & Insurance; Health Care & Social Assistance; Public Administration; and Construction. The three industries reporting a decrease in order backlogs in April are: Other Services; Professional, Scientific & Technical Services; and Wholesale Trade. Nine industries reported no change in backlog of orders in April compared to March.

 


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Apr 2018 13 78 9 52.0
Mar 2018 23 67 10 56.5
Feb 2018 19 74 7 56.0
Jan 2018 16 69 15 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 15th consecutive month, at a faster rate in April. The New Export Orders Index registered 61.5 percent, which is 3.5 percentage points higher than the 58 percent reported in March. Of the total respondents in April, 60 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

 

The 11 industries reporting an increase in new export orders in April — listed in order — are: Retail Trade; Mining; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Accommodation & Food Services; Transportation & Warehousing; Construction; Finance & Insurance; Wholesale Trade; Information; and Professional, Scientific & Technical Services. The only industry reporting a decrease in exports for the month of April is Other Services.

 


New Export Orders
%
Higher
%
Same
%
Lower

Index
Apr 2018 25 73 2 61.5
Mar 2018 19 78 3 58.0
Feb 2018 23 73 4 59.5
Jan 2018 22 72 6 58.0


Imports

The Imports Index reading of 54.5 percent is 0.5 percentage point lower than the 55 percent reported in March. Fifty percent of respondents reported that they do not use, or do not track the use of, imported materials.

 

The six industries reporting an increase in imports for the month of April — listed in order — are: Retail Trade; Mining; Professional, Scientific & Technical Services; Wholesale Trade; Construction; and Transportation & Warehousing. The only industry reporting a decrease in imports in the month of April is Other Services. Nine industries reported no change in imports in April compared to March.

 


Imports
%
Higher
%
Same
%
Lower

Index
Apr 2018 15 79 6 54.5
Mar 2018 15 80 5 55.0
Feb 2018 12 76 12 50.0
Jan 2018 14 80 6 54.0


Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in April registered 60 percent, which is 1.5 percentage points higher than the 58.5 percent that was reported in March. This indicates that respondents believe their inventories are still too high at this time. In April, 22 percent of respondents said their inventories were too high, 2 percent of the respondents said their inventories were too low, and 76 percent said their inventories were about right.

 

The 11 industries reporting a feeling that their inventories were too high in April — listed in order — are: Utilities; Information; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Mining; Construction; Health Care & Social Assistance; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; and Public Administration. No industry reported a feeling that their inventories were too low in April compared with March. Six industries reported no change in inventory sentiment in April compared to March.

 


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Apr 2018 22 76 2 60.0
Mar 2018 20 77 3 58.5
Feb 2018 24 74 2 61.0
Jan 2018 29 64 7 61.0


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 April 2018.

 

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 49 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49 percent, it is generally declining. The distance from 50 percent or 49 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.

 

ISM ROB Content

The Institute for Supply Management® ("ISM") Report On Business® (both Manufacturing and Non-Manufacturing) ("ISM ROB") contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

 

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, datastreams, timeseries variables, fonts, icons, link buttons, wallpaper, desktop themes, on-line postcards, montages, mash-ups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

 

You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@instituteforsupplymanagement.org; subject: Content Request.

 

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, PMI®, and NMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.

 

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 May 2018 data will be released at 10:00 a.m. ET on Tuesday, June 5, 2018.

 

*Unless the New York Stock Exchange is closed.



Back to Top