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Services PMI® at 52.6%; February 2024 Services ISM® Report On Business®Business Activity Index at 57.2%; New Orders Index at 56.1%; Employment Index at 48%; Supplier Deliveries Index at 48.9% TEMPE, Ariz., March 5, 2024 /PRNewswire/ -- Economic activity in the services sector expanded in February for the 14th consecutive month as the Services PMI® registered 52.6 percent, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The sector has grown in 44 of the last 45 months, with the lone contraction in December 2022. The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "In February, the Services PMI® registered 52.6 percent, 0.8 percentage point lower than January's reading of 53.4 percent. The composite index indicated growth in February for the 14th consecutive month after a reading of 49 percent in December 2022, which was the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 57.2 percent in February, which is 1.4 percentage points higher than the 55.8 percent recorded in January. The New Orders Index expanded in February for the 14th consecutive month after contracting in December 2022 for the first time since May 2020; the figure of 56.1 percent is 1.1 percentage points higher than the January reading of 55 percent. The Employment Index contracted for the second time in three months with a reading of 48 percent, a 2.5-percentage point decrease compared to the 50.5 percent recorded in January. "The Supplier Deliveries Index registered 48.9 percent, 3.5 percentage points lower than the 52.4 percent recorded in January. The index returned to contraction — indicating that supplier delivery performance was faster after one month in expansion (or 'slower') territory. In the last 12 months, the average reading of 48.7 percent (with a low of 45.8 in March) reflects the fastest supplier delivery performance since December 2022, when the index registered 48.5 percent. (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.) "The Prices Index registered 58.6 percent in February, a 5.4-percentage point decrease from January's reading of 64 percent. The Inventories Index contracted in February for the third consecutive month, registering 47.1 percent, a decrease of 2 percentage points from January's figure of 49.1 percent. The Inventory Sentiment Index (56.7 percent, down 2.6 percentage points from January's reading of 59.3 percent) expanded for the 10th consecutive month. The Backlog of Orders Index expanded for the second consecutive month in February after two previous months in contraction, registering 50.3 percent, a 1.1-percentage point decrease compared to the January reading of 51.4 percent. "Fourteen industries reported growth in February. The Services PMI®, by being above 50 percent for the 14th consecutive month (after a single month of contraction in December 2022 and a prior 30-month period of expansion), continues to indicate sustained growth — but at a slightly slower rate in February — for the sector." Nieves continues, "The slight decrease in the rate of growth in February is a result of faster supplier deliveries and the contraction in the Employment Index. The majority of respondents are mostly positive about business conditions. Respondents remain concerned about inflation, employment and ongoing geopolitical conflicts." INDUSTRY PERFORMANCE WHAT RESPONDENTS ARE SAYING
Services ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. FEBRUARY 2024 SERVICES INDEX SUMMARIES Services PMI® In February, the Services PMI® registered 52.6 percent, a 0.8-percentage point decrease compared to the January reading of 53.4 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting. A Services PMI® above 49 percent, over time, generally indicates an expansion of the overall economy. Therefore, the February Services PMI® indicates the overall economy is growing for the 14th consecutive month after one month of contraction in December 2022. Nieves says, "The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for February (52.6 percent) corresponds to a 1.2-percent increase in real gross domestic product (GDP) on an annualized basis." SERVICES PMI® HISTORY
Business Activity The 13 industries reporting an increase in business activity for the month of February — listed in order — are: Retail Trade; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Wholesale Trade; Accommodation & Food Services; Public Administration; Construction; Health Care & Social Assistance; Management of Companies & Support Services; Utilities; Professional, Scientific & Technical Services; Information; and Educational Services. The four industries reporting a decrease in business activity for the month of February are: Arts, Entertainment & Recreation; Other Services; Mining; and Transportation & Warehousing.
New Orders The 13 industries reporting an increase in new orders for the month of February — listed in order — are: Retail Trade; Information; Accommodation & Food Services; Management of Companies & Support Services; Public Administration; Construction; Finance & Insurance; Health Care & Social Assistance; Utilities; Transportation & Warehousing; Professional, Scientific & Technical Services; Wholesale Trade; and Educational Services. The only industry reporting a decrease in new orders for the month of February is Arts, Entertainment & Recreation.
Employment The six industries reporting an increase in employment in February — listed in order — are: Accommodation & Food Services; Other Services; Construction; Utilities; Public Administration; and Wholesale Trade. The nine industries reporting a decrease in employment in February — listed in order — are: Real Estate, Rental & Leasing; Mining; Arts, Entertainment & Recreation; Finance & Insurance; Educational Services; Retail Trade; Management of Companies & Support Services; Information; and Professional, Scientific & Technical Services.
Supplier Deliveries The three industries reporting slower deliveries in February are: Educational Services; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The five industries reporting faster supplier deliveries for the month of February are: Accommodation & Food Services; Wholesale Trade; Retail Trade; Construction; and Public Administration. Ten industries indicated no change in February.
Inventories The five industries reporting an increase in inventories in February are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Professional, Scientific & Technical Services; Educational Services; and Management of Companies & Support Services. The 10 industries reporting a decrease in inventories in February, in order, are: Arts, Entertainment & Recreation; Other Services; Retail Trade; Wholesale Trade; Mining; Construction; Information; Transportation & Warehousing; Public Administration; and Health Care & Social Assistance.
Prices Thirteen services industries reported an increase in prices paid during the month of February, in the following order: Other Services; Construction; Public Administration; Finance & Insurance; Professional, Scientific & Technical Services; Retail Trade; Health Care & Social Assistance; Accommodation & Food Services; Arts, Entertainment & Recreation; Educational Services; Utilities; Management of Companies & Support Services; and Information. The three industries reporting a decrease in prices for February are: Mining; Agriculture, Forestry, Fishing & Hunting; and Transportation & Warehousing.
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report. Backlog of Orders The five industries reporting an increase in order backlogs in February are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Retail Trade; Construction; and Utilities. The five industries reporting a decrease in order backlogs in February are: Accommodation & Food Services; Mining; Wholesale Trade; Public Administration; and Transportation & Warehousing. Eight industries indicated no change in February.
New Export Orders The six industries reporting an increase in new export orders in February — listed in order — are: Management of Companies & Support Services; Transportation & Warehousing; Utilities; Wholesale Trade; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The only industry reporting a decrease in new export orders in February is Retail Trade. Eleven industries reported no change in new export orders in February.
Imports The six industries reporting an increase in imports for the month of February, in order, are: Retail Trade; Information; Construction; Management of Companies & Support Services; Professional, Scientific & Technical Services; and Wholesale Trade. The only industry reporting a decrease in imports in February is Accommodation & Food Services. Eleven industries reported no change in imports in February.
Inventory Sentiment The 12 industries reporting sentiment that their inventories were too high in February — listed in order — are: Arts, Entertainment & Recreation; Mining; Other Services; Retail Trade; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Utilities; Educational Services; Transportation & Warehousing; Construction; Information; and Health Care & Social Assistance. The two industries reporting a feeling that their inventories were too low in February are: Real Estate, Rental & Leasing; and Professional, Scientific & Technical Services.
About This Report The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality. The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries. A Services PMI® above 49 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49 percent, it is generally declining. The distance from 50 percent or 49 percent is indicative of the strength of the expansion or decline. The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month. The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. 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Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing [email protected]; subject: Content Request. ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, Manufacturing PMI®, Services PMI®, and Hospital PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc. About Institute for Supply Management® The full text version of the Services 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. 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