According to the Non-Manufacturing Report on Business issued on Tuesday by the Institute for Supply Management (ISM), non-manufacturing output had a strong month in February.
The index which ISM uses to measure non-manufacturing growth is called the Non-Manufacturing Index (NMI). The NMI grew by 3% to 59.7, after a decline by 1.3% to 56.7 from December to January. A reading of 50 or higher on the NMI index suggests positive growth. This month’s growth was 109th consecutive monthly growth, with NMI for February up by 1.0% from the 12-month average of 58.7.
As per the latest ISM report, each of the 18 non-manufacturing sectors it analyses reported positive growth for the month of February. The analysed sectors include Trade, Mining, Educational Services, Utilities, Other Services, Real Estate, Rental and Leasing, Construction, Health Care and Social Assistance, Professional, Scientific and Technical Services, Public Administration, Agriculture, Forestry, Fishing and Hunting, Finance and Insurance, Information, Accommodation and Food Services, Arts, Entertainment and Recreation, and Retail Trade.
Few of the comments by ISM member respondents reported by the agency emphasised on Sino-US trade talks. The comments collected by ISM prior to the recent announcement states that the US postponed a previously announced increase for tariffs on Chinese exports to the US, which was scheduled to go into effect on March 1, with the current tariff rate remaining at 10%.
An ISM respondent representing the accommodation & food services stated that at the time his company was anxiously awaiting decisions on the proposed tariffs on China, noting that high Chinese commitments to agriculture output will increase costs, reducing margins in food and restaurant industry.
A construction respondent commented that the business is going strong in all areas. It was mostly due to commercial construction activity. A respondent from wholesale trade stated that his company is witnessing increases in business activity, which has led its sales projections to strengthen for the month, with stable prices and good rates from suppliers. He, however, also cited that there still some spot outages, but those are mainly due to capacity and planning limitations or shortcomings.
While speaking to reporters, Tony Nieves, Chairman of ISM’s Non-Manufacturing Business Survey Committee, stated that as the holiday season approached in December, the market tapered off a bit in January, though the market bounced back strongly in February, with solid numbers.
He added that ISM believes that consumer confidence has had a bit of an uptick. Also, the unemployment rate for the month was low, with wage pressure and wages rising, he said. Further, Nieves said that there was more confidence in the market, and it had rebounded a little bit. Apart from this, oil prices were low, which coupled with all these different variables made up a good overall economic picture. He believed that all of this was before the positive comments recently coming out of the Sino-US trade negotiations.
President Trump has postponed the planned increase in tariffs on imports from China. The current negotiations are extremely vital from a global standpoint, as the prolonged trade war between the two biggest economies has taken a harsh toll on global growth rate.