The resilience of an economy often manifests in sectors that don't typically capture the spotlight. America's non-manufacturing industry represents such a crucial component of economic health. Recent data reveals that US non-manufacturing activity maintained its strong growth momentum in November, providing solid support for the overall economy's stable performance.
According to the Institute for Supply Management's (ISM) Non-Manufacturing Business Report, the Non-Manufacturing Index (NMI) - a key indicator measuring sector growth - reached 59.3 in November, significantly above the 50-point threshold that separates expansion from contraction. This figure represents a 2.2 percentage point increase from October's 57.1 and exceeds the 12-month average of 56 by 3.3 percentage points.
Notably, November's NMI came just 0.3 percentage points below the all-time high of 59.6 recorded in August since the index's inclusion in ISM reports in January 2008. ISM data further shows that non-manufacturing economic activity has now expanded for 58 consecutive months, demonstrating remarkable sector stability and continuity.
Breaking Down the NMI Components
To fully understand these figures, we must examine the NMI's four weighted sub-indices: Business Activity, New Orders, Employment, and Supplier Deliveries.
- Business Activity Index: As the most heavily weighted NMI component, this directly reflects production and service levels. November's strong performance indicates non-manufacturing firms are actively scaling operations to meet market demand, likely influenced by seasonal holiday spending and optimistic economic forecasts.
- New Orders Index: This forward-looking indicator shows growing demand for non-manufactured goods and services, potentially driven by improved consumer confidence, increased business investment, and export growth.
- Employment Index: The rising employment component suggests expanded hiring to meet business needs, which may boost consumer income and spending. However, labor market challenges including shortages and wage pressures persist.
- Supplier Deliveries Index: Readings below 50 indicate faster delivery times, suggesting either reduced demand or improved supply chain efficiency. November's figures require contextual analysis with other sub-indices.
Sector Challenges and Opportunities
Beyond quantitative data, ISM's report includes qualitative comments highlighting operational challenges like rising material costs, increased labor expenses, and trade policy impacts. Conversely, businesses also note opportunities from technological innovation, market expansion, and supportive government policies.
The non-manufacturing sector's robust November performance underscores its critical role in sustaining economic growth. While expansion appears solid across business activity, new orders, and employment metrics, ongoing monitoring of sector challenges remains essential for accurate economic assessment and policy formulation.