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Non-Manufacturing Index at 52.5%; March 2020 Non-Manufacturing ISM® Report On COVID-19 Impact on Business®

published: 2020-04-05 18:00

Economic activity in the non-manufacturing sector grew in March for the 122nd consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

Image by Gerd Altmann from Pixabay

Business Activity Index at 48.0%; New Orders Index at 52.9%; Employment Index at 47.0%; Supplier Deliveries Index at 62.1%

The report was issued by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee on April 3, 2020: "The NMI® registered 52.5 percent, 4.8 percentage points lower than the February reading of 57.3 percent. This represents continued growth in the non-manufacturing sector, at a slower rate. The Non-Manufacturing Business Activity Index decreased to 48 percent, 9.8 percentage points lower than the February reading of 57.8 percent, reflecting contraction for the first time since July 2009, when the index registered 47.2 percent. The New Orders Index registered 52.9 percent, 10.2 percentage points below the reading of 63.1 percent in February. The Employment Index decreased 8.6 percentage points to 47 percent from the February reading of 55.6 percent.

"The Supplier Deliveries Index registered 62.1 percent, up 9.7 percentage points from the February reading of 52.4 percent, and limited the decrease in the composite NMI®. The Supplier Deliveries Index is one of four equally weighted subindexes that directly factor into the NMI®, along with Business Activity, New Orders and Employment. Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases. However, the high percentage-point increase in March — the largest monthly change since an 18.5-point decrease in September 1997 — was primarily a product of supply problems related to the coronavirus (COVID-19).

"The Prices Index of 50 percent is 0.8 percentage point lower than the February reading of 50.8 percent, indicating that prices were unchanged in March. According to the NMI®, nine non-manufacturing industries reported growth. The non-manufacturing sector composite index indicates growth in March; however, the extreme slowing of supplier deliveries weighted heavily in the calculation. The other three subindexes that contribute to the NMI® contracted strongly in March. Respondents are concerned about the coronavirus impact on the supply chain, operational capacity, human resources and finances, as well as the ramifications for the overall economy."

What Respondents Are Saying

  • "Significant shortages of personal protective equipment (PPE), chemical reagents, test swabs and other basic medical supplies persist. Extreme sourcing measures are required to procure necessary supplies for basic operations. Distributor allocations continue across the board." (Health Care & Social Assistance)
  • "Severe impact to operations as a result of COVID-19. Major challenges in obtaining needed supplies for first responders, including N95 masks, gowns, disinfecting products and medical supplies. As a local government, we are experiencing a significant increase in activity due to emergency-response efforts. Starting to experience inappropriate price increases for short-supply items." (Public Administration)
  • "Significant demand disruption caused by the coronavirus." (Accommodation & Food Services)
  • "The coronavirus is having an impact, but not as much as we thought it would at this point. All sectors are staying busy. Although there are many customer concerns, we are finding work-arounds and adapting to the ever-changing situation." (Construction)
  • "COVID-19 shelter-in-place order in effect. Offices closed except for essential personnel." (Educational Services)
  • "Like most businesses, we cannot fully project how the coronavirus will impact us. By displaying prudence and avoiding panic, we are trying to navigate this crisis. As human capital is our greatest expense, protecting that capital is job one. Supply chains are overstressed and will normalize only when the panic subsides." (Information)
  • "COVID-19 has greatly impacted daily operations. All staff personnel are telecommuting, and customer concerns have shifted from normal activities to preventative measures." (Management of Companies & Support Services)
  • "We are experiencing no real issues from a business perspective, although COVID-19 has forced us to reconsider elements of how our workforce gets things done." (Mining)
  • "As expected for many industries (whether manufacturing or non-manufacturing), purchasing has slowed as we evaluate the economic climate and prepare for long-term effects." (Retail Trade)
  • "The coronavirus is effecting every aspect of business." (Real Estate, Rental & Leasing)

The full text version of the Non-Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET.

View source version on PR Newswire: https://www.prnewswire.com/news-releases/nmi-at-52-5-march-2020-non-manufacturing-ism-report-on-business-301034905.html


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