The Institute for Supply Management (ISM) Non-Manufacturing Index (NMI) indicates the U.S. service sector grew more moderately in July. However, comments from the panel suggest an expected pickup in the second half of 2019.
“The non-manufacturing sector’s rate of growth continued to cool off,” Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, said. “Respondents indicated ongoing concerns related to tariffs and employment resources.”
The New Orders Index came in at 54.1%, which is down 1.7% from June. The Employment Index still rose 1.2% in July to 56.2%, but comments from the panel confirm PPD’s repeated reporting on the skills gap.
The 13 non-manufacturing industries reporting growth in July — listed in order — are: Accommodation & Food Services; Utilities; Professional, Scientific & Technical Services; Real Estate, Rental & Leasing; Transportation & Warehousing; Construction; Information; Other Services; Finance & Insurance; Public Administration; Management of Companies & Support Services; Mining; and Health Care & Social Assistance.
The five industries reporting a decrease are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Wholesale Trade; and Educational Services.
WHAT RESPONDENTS ARE SAYING
- “Business is still strong, considering the seasonality.” (Accommodation & Food Services)
- “Business volumes were flat compared to the previous month.” (Health Care & Social Assistance)
- “Tariffs continue to push costs higher, and customers are looking for more discounts due to mortgage-rate fluctuations.” (Construction)
- “Some uncertainty hinges on tariffs, but there have been no changes in market conditions.” (Information)
- “For our company, July is looking to be a record-setting month for sales. Customers have been converting quotes to sales quicker than in past months. The tariffs have increased prices for our industry, but our clients are not balking at the slight price increases that have been passed along. We feel that (the third quarter) will be strong.” (Management of Companies & Support Services)
- “It appears that the mining capital-expense environment is improving, with a good prospectus for the coming months. Our dependence on Chinese and Asian supply chains remains strong. NAFTA countries do not have the same capacity and speed.” (Mining)
- “Companies involved in the oil and gas industry remain cautious relative to hiring direct employees and contingent workers, as well as investing in new capital projects. Volatility in oil price and geopolitical concerns are driving this wait-and-see approach.” (Professional, Scientific & Technical Services)
- “Demand seems strong. There are still pressures for skilled labor. It is difficult to find fully qualified candidates. Suppliers are having trouble with demand.” (Public Administration)
- “As our corporate objectives drive us more and more into digitization, advanced analytics, and data management in general, we are finding it increasingly difficult to find, develop and retain professional with advanced skills in these disciplines.” (Retail Trade)
- “Business is somewhat slow for the first half of 2019, but it is expected to pick up for the second half.” (Wholesale Trade)