From the ISM:
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president – supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 55.4 percent in March, 2.4 percentage points higher than the seasonally adjusted 53 percent registered in February, and indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 60 percent, reflecting growth for the fourth consecutive month. The New Orders Index increased 7.3 percentage points to 62.3 percent, and the Employment Index increased 1.2 percentage points to 49.8 percent. The Prices Index increased 2.5 percentage points to 62.9 percent in March, indicating an increase in prices paid from February. According to the NMI, 14 non-manufacturing industries reported growth in March. Respondents' comments are mostly positive about business conditions and the direction of the economy."
Let's take some of these in pieces:
In March, the NMI registered 55.4 percent, indicating growth in the non-manufacturing sector for the third 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.
Note -- this is the third consecutive month of growth.
ISM's Non-Manufacturing Business Activity Index in March registered 60 percent, an increase of 5.2 percentage points when compared to the seasonally adjusted 54.8 percent registered in February. Thirteen industries reported increased business activity, and three industries reported decreased activity for the month of March. Two industries reported no change from February. Comments from respondents include: "Seeing an increase in business. Our customers are feeling more optimistic"; and "New year budgets, as well as replacing inventories depleted during 2009."
Note the balance between increasing and decreasing industries -- 13 to 3 with an additional two showing no growth.
ISM's Non-Manufacturing New Orders Index grew in March for the seventh consecutive month. The index registered 62.3 percent, which is an increase of 7.3 percentage points from the seasonally adjusted 55 percent reported in February. Comments from respondents include: "Improving sales trend; capital money flowing with the start of a new year"; "More bids; work starting"; and "Prime selling month."
Note -- that is seven consecutive months of growth in new orders.
Employment activity in the non-manufacturing sector contracted in March for the 27th consecutive month. ISM's Non-Manufacturing Employment Index for March registered 49.8 percent. This reflects an increase of 1.2 percentage points when compared to the seasonally adjusted 48.6 percent registered in February. Six industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "We are staffing to volume" and "Jobs are not being filled pending budget issues."
This is the one drawback to the report -- employment is still "contracting". From a numbers perspective, this is in line with the ADP employment report but not the BLS report.
Here are the anecdotal comments from the report:
- "Business conditions have returned to normal (pre-recession). Our business is up significantly since 2009. We are very positive about the upcoming year." (Information)
- "Demand for loans, credit cards, mortgages and equity lending is expected to continue to increase." (Finance & Insurance)
- "Brisk business activity continues as more projects get 'green light.'" (Utilities)
- "Observing some relaxation on several fronts regarding spending and hiring. Still very cautious, but making investments where they make sense." (Retail Trade)
- "Limited funding available for development [and] expansions." (Accommodation & Food Services)
- "The economy appears to be holding its own; however, state and local funding is projected to decrease next fiscal year." (Educational Services)
Finally, here is a chart of the index
This is a very good number aboud should provide some encouragement to the market.