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The non-manufacturing activity remains high nonetheless

ISM Non-Manufacturing Cools Off, But Remains Strong

Posted Wednesday, November 4, 2020 by
Skerdian Meta • 2 min read

The ISM non-manufacturing index has been showing that this sector is surging in the US, as well as manufacturing. It cooled off in August a little, but increased again in September to 57.8 points. Today’s report showed another cooling off in October, but the activity remains quite strong, with the indicator at 56.6 points.


ISM October US Non-Manufacturing Index

  • US ISM October services index 56.6 vs 57.5 expected
  • Prior was 57.8


  • Business activity 61.2 points vs. 63.0 in September
  • New orders 58.5 points vs. 61.5 in September
  • Backlog of orders 54.4 points vs. 50.1 previously
  • Employment to 50.1 points from 51.8 last month
  • New export orders 53.7 points vs. 52.6 previously
  • Imports 52.5 points vs. 46.6 previously
  • Supplier deliveries 56.2 points vs. 54.9 previously
  • Inventory change 53.1 points vs. 48.8 previously
  • Inventory sentiment 51.1 points vs. 55.4 previously last month

This is the weakest since May, though it still remains well above 50. There are a few red flags here, particularly employment and rising inventories.

  • “Business has improved, but greatly reliant on COVID-19-related restrictions. Supplier’s inventories and lead times are longer and spotty with outages due to keeping lead times lean as a cash flow measure, but putting consistent supply at risk.” (Accommodation & Food Services)
  • “Interesting business cycle: Labor is still in short supply, and work orders are picking up.” (Construction)
  • “Challenges to maintain safety and prevent the spread of COVID-19 has meant changes in the way activities are carried out. Purchases of personal protective equipment [PPE] and facilities equipment along with modifications to buildings and walkways has led to higher spending in some areas.” (Educational Services)
  • “Given COVID-19, the adjustments we have made across the company has allowed us to reach previous employment levels, and those furloughed are back to work. Everyone is careful to wear the required PPE and keep distancing. We have added additional cleaning staff between shifts to upgrade sanitation.” (Finance & Insurance)
  • “The new normal COVID-19 environment is causing uncertainty, but we’ve seen an increase in business that is close to pre-COVID-19 volumes for procedures.” (Health Care & Social Assistance)
  • “While the economy is getting better, there is still very much uncertainty about the future. We are putting capital expenditures on hold until we gain additional confidence and certainty.” (Information)
  • “We are remaining cautiously positive and resuming normal business operations.” (Management of Companies & Support Services)
  • “Encouraging signs continue for an improved fourth quarter.” (Professional, Scientific & Technical Services)
  • “We continue to be cautiously optimistic that the rebound in business that began in July continues to sustain.” (Retail Trade)
  • “Business continues to gain as people are travelling and businesses are opening up to consumers.” (Wholesale Trade)
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