The Institute for Supply Management released their May 2008 Non-Manufacturing ISM Report on Business today. The Non-Manufacturing Index (NMI) dropped 0.225% to 51.725% in May. This was the second consecutive month of expansion in the non-manufacturing sector after plunging to 44.575% in January 2008. A reading above 50% indicates the non-manufacturing sector economy is generally expanding.
Business Activity in the Non-Manufacturing sector rose by 2.7% to 53.6% and New Orders rose by 2.5% to 50.1%. This was offset by Employment dropping by 2.1% to 48.7% and Supplier Deliveries dropping by 5% to 51%. Together these four components comprise the NMI index.
Here is what some of the respondents to the survey are saying:
- "Business activity for the last month has increased slightly over the previous month." (Professional, Scientific & Technical Services)
- "High energy prices hurting the cost and sell side of our business." (Agriculture, Forestry, Fishing & Hunting)
- "Economic and market conditions continue to weigh down financial services industry in general. Spending and employment growth are on hold until overall market conditions show improvement." (Finance & Insurance)
- "The economy continues to be pressured by high fuel costs and food costs in general. The consumer seems to approach spending with trepidation given all the uncertainty in the markets." (Accommodation & Food Services)
- "Business is picking up." (Retail Trade)
Here are a couple of reactions from the investment community:
'This tells us, that even if we're in recession -- something I'm not ruling out -- it's a very shallow one,' said Bernard Baumohl, executive director, The Economic Outlook Group. "This really confirms that what we're seeing is very sluggish growth, but not contraction,'' Julia Coronado, a senior economist at Barclays Capital in New York
NMI is the latest of many readings suggesting that while we may be at the brink of a recession, we have yet to see the full blown effects of one.
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