Services Sector Back To Growth, At Least Some

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Published: October 5, 2009 10:21 am

Last Updated: April 28, 2020 4:39 am

Money Stack Pic The service sector is now back to expanding, even officially, according to the ISM non-Manufacturing data just released. The Institute for Supply Management’s Non-Manufacturing Business Survey came in at 50.9% for September 2009, which is above that 50.0% break-even hurdle between growth an contraction and above the 50.0% that was expected in the Bloomberg economist survey. The highest reading that Bloomberg had noted was 51%. This represents 2.5% higher than the 48.4% reported in August after 11 consecutive months of contraction. Just be advised that it was only 5 of the 18 industries that reported expansion.

The Non-Manufacturing Business Activity Index rose 3.8% to 55.1%, the second consecutive month this index has been positive since September 2008. The New Orders Index rose 4.3% to 54.2%.

The Employment Index rose by 0.8% but is still what is holding the reading lower. It came in at 44.3% percent. The Prices Index fell by a sharp 14.3% to 48.8% percent in September, and the group noted that this shows a significant reversal and decrease in prices paid from August.

Five non-manufacturing industries reporting growth were as follows:

Utilities;
Health Care & Social Assistance;
Retail Trade;
Construction;
Wholesale Trade

Interestingly, 15 of the 18 non-manufacturing industries expect to derive some benefit from the American Recovery and Reinvestment Act, and 14 non-manufacturing industries responded that they expect their companies to see some benefit. The comments vary by industry and remain mixed about business conditions and the overall economy.

The 13 industries reporting contraction in September were as follows:

Arts, Entertainment & Recreation;
Agriculture, Forestry, Fishing & Hunting;
Accommodation & Food Services;
Mining;
Public Administration;
Other Services;
Real Estate, Rental & Leasing;
Professional, Scientific & Technical Services;
Information;
Management of Companies & Support Services;
Finance & Insurance;
Educational Services;
Transportation & Warehousing.

If the employment situation can stabilize or get better, these forward numbers may even start to look even better.

JON C. OGG
October 5, 2009

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