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U.S. Service Industries Remain Strong, and Growing

Economic activity in the non-manufacturing (service) sector grew in June for the 101st consecutive month, say the…

  • July 29, 2018

Economic activity in the non-manufacturing (service) sector grew in June for the 101st consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.

According to Anthony Nieves, Chair of the Institute for Supply Management (ISM) Non-Manufacturing Business Survey Committee, “The NMI® registered 59.1 percent, which is 0.5 percentage point higher than the May reading of 58.6 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate.”

The Non-Manufacturing Business Activity Index increased to 63.9 percent, 2.6 percentage points higher than the May reading of 61.3 percent, reflecting growth for the 107th consecutive month, at a faster rate in June.

What Respondents Are Saying:

“Tariffs, freight [issues] and labor shortages continue to have an inflationary influence on costs.” (Construction)

“Positive outlook — business activity on the uptick.” (Finance & Insurance)

“Shortage of IV solutions and drugs continues to be an issue.” (Health Care & Social Assistance)

“Crude prices are causing concern, as it is a driver in newsprint inks. Tariffs on paper and aluminum are causing apprehension about future pricing. Suppliers are posturing and threatening price increases, and we are doing our best to reject increases.” (Information)

“Trade tariffs are creating price uncertainty.” (Management of Companies & Support Services)

“Domestically, we are still experiencing a shortage of transportation providers that is getting worse each month when retiring drivers or drivers moving into other opportunities are not being replaced. Internationally, there is a shortage of flat racks [that] has caused late shipments. The tariffs on steel and aluminum have also had some negative effects on our supply of material, but we have applied for exemptions.” (Other Services)

“Oil price stabilization has led to increased hiring in some sectors of the industry, as well as a small increase in major capital projects for offshore drilling companies. Oil-field services hiring continues to be strong, as does hiring and capital spending in the petrochemical and downstream sectors of the industry.” (Professional, Scientific & Technical Services)

“Commodity prices [are] increasing due to demand and transportation costs.” (Public Administration)

“Sales have remained strong and are continuing to increase. Currently, we are on pace for a top-line record. The bottom line is flatter, as we have been fighting commodity cost increases and exchange-rate variances throughout the first half of 2018.” (Retail Trade)

“Wire sales improve as contractors ramp up with the rise in copper. We’re seeing ongoing price increases in nearly all commodities due to higher freight expenses by manufacturers and shortage of truck drivers.” (Wholesale Trade)

In June, the NMI registered 59.1 percent, 0.5 percentage point higher than the 58.6 percent registered in May, indicating continued growth in the non-manufacturing sector for the 101st 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. Find out more at instituteforsupplymanagement.org.

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