As the pulse of the global economy beats through data, a critical question emerges: How resilient is the U.S. non-manufacturing sector? The latest figures reveal that while experiencing a modest pullback, non-manufacturing activity continues to demonstrate steady expansion.
WASHINGTON – The latest Non-Manufacturing ISM Report On Business from the Institute for Supply Management (ISM) indicates that U.S. non-manufacturing activity maintained solid growth in September. Although key metrics showed slight declines, the overall performance remains strong, signaling continued expansion in this vital segment of the economy.
Key Indicators Show Sustained Expansion
The ISM Non-Manufacturing Index (NMI), which measures sector growth, registered 58.6 in September. While this marks a 1.0 percentage point decrease from August's 59.6 reading, it remains significantly above the 50-point threshold that separates expansion from contraction. Notably, August's NMI had reached its highest level since the index was first included in reports in January 2008. According to ISM data, the NMI has now remained above 50 for 56 consecutive months, indicating prolonged sector growth.
Further analysis reveals that September's NMI exceeds the 12-month average of 55.4 by 3.2 percentage points, demonstrating performance well above long-term trends. This data provides valuable insight into the broader health of the U.S. economy.
Component Breakdown
The report provides detailed analysis of NMI components, which include business activity, new orders, employment, and supplier deliveries:
- Business Activity Index: Fell to 61.0 in September, down 2.9 percentage points from August's 63.9, indicating moderated but still elevated activity levels.
- New Orders Index: Edged up slightly to 61.5 from 61.4, reflecting sustained demand for non-manufacturing goods and services.
- Employment Index: Rose 2.5 percentage points to 57.2, signaling continued labor market improvement and increased hiring.
- Supplier Deliveries Index: Slipped to 50.0 from 50.5, suggesting stable delivery speeds with neither significant delays nor acceleration.
Sector Sentiment and Challenges
Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, noted in the report: "The non-manufacturing sector continued to grow at a steady rate in September. Respondents remain optimistic about business conditions and the overall economic outlook."
Nieves also highlighted widespread concerns among respondents regarding tariff impacts, with many citing adverse effects on business costs and supply chains. These observations reflect the challenges and uncertainties businesses face in the current global trade environment.
Industry Performance
At the industry level, 14 of the 18 reported non-manufacturing sectors showed growth in September, including:
- Information services
- Real estate, rental, and leasing
- Public administration
- Professional, scientific, and technical services
- Finance and insurance
- Construction
- Wholesale trade
- Transportation and warehousing
- Accommodation and food services
- Mining
- Healthcare and social assistance
- Retail trade
- Utilities
Four sectors contracted: agriculture, forestry, fishing, and hunting; arts, entertainment, and recreation; educational services; and management of companies and support services.
The ISM report demonstrates that despite facing challenges, the U.S. non-manufacturing economy maintains robust growth momentum. These findings provide valuable perspective on the nation's economic health while informing decision-making for businesses and policymakers. However, organizations must remain vigilant to potential risks, particularly those related to trade policy developments.