Raw Finance

The Institute for Supply Management has announced that its February 2010 Non-Manufacturing ISM Report on Business® registered a 53 percent reading.  After January’s 50.5 percent reading, this represents two consecutive months of growth.  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.

The Non-Manufacturing Business Activity Index increased 2.6 percentage points to 54.8 percent, reflecting growth for the third consecutive month. The New Orders Index increased 0.3 percentage point to 55 percent, and the Employment Index increased 4 percentage points to 48.6 percent. The Prices Index decreased 0.8 percentage point to 60.4 percent in February, indicating an increase in prices paid from January.

Breaking the numbers down by industry, however, reflects a more mixed picture.  Nine industries reported growth, but eight industries reported contraction.  The nine industries reporting growth in February based on the NMI composite index — listed in order — are: Information; Arts, Entertainment & Recreation; Transportation & Warehousing; Public Administration; Professional, Scientific & Technical Services; Other Services; Retail Trade; Wholesale Trade; and Finance & Insurance. The eight industries reporting contraction in February — listed in order — are: Educational Services; Health Care & Social Assistance; Management of Companies & Support Services; Construction; Utilities; Accommodation & Food Services; Real Estate, Rental & Leasing; and Mining.

In addition, comments on current economic conditions varied greatly across industries:

• “Conditions for our business have substantially improved over the last three months.” (Information)
• “We are proceeding with caution based upon the current market conditions.” (Public Administration)
• “Business activity about the same as last month. Perhaps a slight increase in new orders for material and services — nothing major.” (Utilities)
• “The overall unemployment and the net effect of housing [instability] continue to affect our business.” (Retail Trade)
• “Business is okay. Customers are doing a lot of price shopping.” (Agriculture, Forestry, Fishing & Hunting)

For investors, it seems like the area that has the greatest potential growth is information and information technology.  One might also consider utilities that offer significant dividends.

For more on the February 2010 Non-Manufacturing ISM Report on Business®, please click on the “Economic Growth Statistics” page on the menu bar above and scroll down to the bottom of the page.