Monthly ISM Non-Manufacturing NMI

The September ISM Non-Manufacturing NMI was release this morning.  ISM NMI measures the diffusion of index based on 400 surveyed purchasing managers, excluding the manufacturing industry.  The survey collects information on inventories, new orders, backlog orders, prices for material and such.  This is considered a leading indicator of economic health as rising orders means that business is growing and hiring may follow.  The forecasted number was for an index reading of 52.1 and the actual headline number came in at 53.2, beating forecasts and Augusts number.

Now we need to peel back the numbers to see where the increase in the broad index comes from.   We see that New Orders, Employment, Supplier deliveries and Export New Orders rose, while Business Activity and backlog orders decreased.  New orders and Export New orders is a great sign to see those numbers moving higher again.  

Inventories also decreased which is a good sign, prices were basically flat to slightly down and imports increased.  Decreasing inventories means that they are filling orders again and using inventory to do so, this is a positive sign.

Overall this seemed like a good report.  We need to see this trend continue for a few months to declare it a trend vs. an outlier.