United States ISM Non-Manufacturing Report




Using Non-Manufacturing ISM to describe the Services side of the economy (i.e. most of the economy) is amusingly malapropos.

Anyhow, the only proper way to chase a stiff shot of 6 consecutive quarters of growth accelerating en fuego’ness while also stoking the reflationary angst fire is:

  • Headline ISM Services = +3.9pts sequentially to 59.9 = 149-month high to kickstart 2018
  • New Orders = +8.2pts sequentially to 62.7 = 84-month High
  • Current Activity, Employment and Backlogs all rising
  • Prices = +2pts, north of 60 and back towards multi-year highs.  “Huge Pricing Pressure” making an appearance in the respondent commentary

Of course, the same increasing probability of backslide in overheated, inherently mean-reverting diffusion indices that we highlighted ahead of the ISM Manufacturing retreat holds for the Services series as well.

Until then, consider your Topping processes still in process.

Mr. Christian Drake via @hedgeyeusa



After cooling in December, the ISM non-manufacturing index rose to a new cycle high of 59.9 in January, The index had already posted a decade-high this fall following hurricane-related distortions, but the January reading appears to be the result of overall firming in the sector.

New Orders gained 8.2 points to a reading of 62.7  as more firms as an increase in bookings.

Services firms saw increasing prices in 15 of the 18 reporting industries. That echoes reports from the factory sector in January. While one month does not make a trend, we will watch these closely during the next few months to see if a trend takes hold.

Export and import activity has perked up, with both indices above their 6-month averages in January. The rise in imports is stronger, suggesting trade may again be a drag on Q1 GDP growth.

Industry Performance

The 15 non-manufacturing industries reporting growth in January — listed in order — are:

Management of Companies & Support Services;

Arts, Entertainment & Recreation; Mining; Utilities;

Retail Trade;


Transportation & Warehousing;

Public Administration;

Real Estate, Rental & Leasing;

Health Care & Social Assistance;

Agriculture, Forestry, Fishing & Hunting;

Educational Services;

Finance & Insurance;

Wholesale Trade;

Accommodation & Food Services.

The three industries reporting contraction in January are:


Other Services;

Professional, Scientific & Technical Services.

Screenshot 2018-02-05 14.02.27


  • “Executive management [is] excited about tax breaks for CapEx purchases in [the] new tax bill.” (Information)
  • “Month-over-month steady growth, on average, [is] 3 percent on project volume and 1 percent on total revenue.” (Construction)
  • “Signs of strong growth [in] financial performance expectations given the recent tax changes.” (Finance & Insurance)
  • “Positive outlook for 2018. We see huge pricing pressure.” (Health Care & Social Assistance)
  • “Business is starting off solid.” (Accommodation & Food Services)
  • “First quarter begins slow like 2017, but expect things to pick up later in Q1. Outlook continues to look bright for 2018.” (Professional, Scientific & Technical Services)
  • “Business activity is low due to the continued partial funding [of] bills passed (continuing resolutions).” (Public Administration)
  • “Overall, sales velocity looks strong. Some regional differences due to weather conditions, but overall, a strong month.” (Wholesale Trade)



Commodities Up in Price

Aircraft Parts; Aluminum Products; Bacon (2); Chemical Products; Copper; Copper Products (6); Copper Wire; #1 Diesel Fuel (8); #2 Diesel Fuel (6); Electrical Equipment; Fuel; Gasoline (6); Labor — Construction (11); Lumber Products (7); Natural Gas (3); Paper (2); Poly Products; Steel; Steel Plate; Steel Products (4); Transportation Costs and Transportation Services.

Commodities Down in Price

Chicken Products.


Tough day for Tyson, Sanderson Farms (funny thing about them), and Pilgrim’s Pride. Apparently, they’re implicated in colluding to fix chicken prices (and yes, I’m serious):

Mr. White via Heisenberg Report 

Commodities in Short Supply

Coated Freesheet; Construction Subcontractors; IV Solutions (6); Labor (6); Labor — Construction (22); and Labor — Temporary (5).

Note: The number of consecutive months the commodity is listed is indicated after each item.



In January, the NMI® registered 59.9 percent, 3.9 percentage points higher than the seasonally adjusted 56 percent registered in December, indicating continued growth in the non-manufacturing sector for the 96th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

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