The Institute for Supply Management released today its report on Non-Manufacturing Index [NMI]. The report, which is considered to be a reliable near-term economic barometer, showed contraction on economic activity in the non-manufacturing sector.
The NMI (Non-Manufacturing Index) registered 37.3 percent in November, 7.1 percentage points lower than the 44.4 percent registered in October, indicating contraction in the non-manufacturing sector for the second consecutive month. The Non-Manufacturing Business Activity Index decreased 11.2 percentage points to 33 percent. The New Orders Index decreased 8.6 percentage points to 35.4 percent, and the Employment Index decreased 10.2 percentage points to 31.3 percent.
These are the lowest levels for each of these indexes since they were first reported in 1997. The Prices Index decreased 16.8 percentage points to 36.6 percent in November, indicating a decrease in prices from October. This is the largest-ever one-month decline in the index and its lowest level since it was first reported in 1997.
The report points out that “respondents’ comments reflect concern about the time line for the economy to stabilize and the impact it is having on discretionary spending and employment”. Clearly, the credit crunch continues to depress capital-spending ; consequently sinking profitability in various sectors of the economy. Today’s report seems to follow that pattern. Until the economy re-accelerates, capital spending will remain at risk.
According to the NMI, the one industry reporting growth in November based on the new NMI composite index is Health Care & Social Assistance. In terms of growth in employment — Information industry was the only industry reporting growth.