When gauging the pulse of the global economy, the health of the non-manufacturing sector serves as a critical barometer. The latest signals from the Institute for Supply Management (ISM) reveal a resilient expansion, albeit at a marginally slower pace in September.
The ISM Non-Manufacturing Business Report indicated that the Non-Manufacturing Index (NMI) stood at 58.6 in September, down from August’s 59.6 but still well above the 50-point threshold that separates expansion from contraction. This marks the 56th consecutive month of growth for the sector, underscoring the enduring strength of the US economy.
Sustained Expansion Amid Modest Deceleration
The NMI is a key indicator of non-manufacturing activity, with readings above 50 signaling growth. September’s figure of 58.6 reflects continued robust expansion, even as it retreated from August’s 59.6 —the highest level since the index was introduced in January 2008. The slight dip suggests a natural moderation following peak performance rather than a trend reversal.
Notably, the September NMI exceeded the 12-month average of 55.4 by 3.2 percentage points, reinforcing the sector’s outperformance relative to its recent trajectory. This resilience highlights the underlying momentum driving non-manufacturing growth.
Key Sub-Indicators and Sector Dynamics
The ISM report provides granular insights into sub-components such as business activity, new orders, employment, and supplier deliveries. These metrics offer a deeper understanding of the sector’s drivers and potential vulnerabilities:
Business Activity Index
: Measures production and service levels.
New Orders Index
: Tracks incoming demand.
Employment Index
: Assesses labor market conditions.
Supplier Deliveries Index
: Gauges supply chain efficiency.
Fluctuations in these sub-indices reveal operational pressures, from labor shortages and inflationary risks to opportunities like technological adoption or policy tailwinds.
Outlook and Considerations
While the non-manufacturing sector demonstrates remarkable resilience, challenges such as supply chain disruptions and wage pressures persist. Policymakers must balance supportive measures with vigilance to sustain this growth trajectory.
The ISM’s findings affirm the US economy’s adaptability, though vigilance remains paramount to navigate evolving headwinds.