Economy: ISM Non-Manufacturing Index (NMI®) for May 2018

Earlier today, the Institute for Supply Management (ISM®) released their Non-Manufacturing Index (NMI®) for May 2018:

Predicted: 58.0%
Actual: 58.6%

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Previous month: 56.8%

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The NMI is a reliable barometer of the U.S. services sector; above 50% implies expansion, while a reading below 50% implies that the services sector contracted.

Service categories include: Agriculture, Forestry, Fishing + Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation + Warehousing; Information; Finance + Insurance; Real Estate, Rental + Leasing; Professional, Scientific + Technical Services; Management of Companies + Support Services; Educational Services; Health Care + Social Assistance; Arts, Entertainment + Recreation; Accommodation + Food Services; Public Administration; and Other Services (services such as Equipment + Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning + Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).

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From today' report:

"...Economic activity in the non-manufacturing sector grew in May for the 100th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®..."

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Here's a sampling of comments made by survey participants:

“Since the last report, our foil lid supplier stated that the tariff on aluminum has caused supply interruptions and higher costs. A price increase was instituted by the supplier.”
(Agriculture, Forestry, Fishing and Hunting)

“Material prices have been difficult to predict this year, and suppliers have struggled to hold prices for any extended period on quotes, specifically on lumber and lumber-related products. The instability has proven frustrating, but a larger problem is that we are starting to see longer lead times in many of the same areas that could start impacting timelines if they continue to get worse as we get into the main building season.”
(Construction)

“After a challenging 2017 that ended strong, 2018 is off to a good start. Volume from existing clients as well as new sales are up, although the growth is marginal. May is showing a continuation of the monthly growth when measured over [the] previous year, leading to optimism for the rest of 2018.”
(Management of Companies and Support Services)

“The trade discussions with NAFTA, Korea and the European Union will have critical impacts on our spend relating to steel products. Also, the potential of the U.S. pulling out of the Iran nuclear deal could push crude prices higher.”
(Mining)

“Business is starting to increase. We have spent two years reducing our inventories to a level to support the current business climate. Now the uptick is faster than anticipated and supply is out of alignment with demand, which is causing many stockouts and shortages, and the need to expedite inventory. In shipping, we still [are] experiencing a shortage of domestic trucking resources (especially flat beds) and international shortage of flat racks. We [are] working to minimize the impact of the tariff on steel and aluminum.”
(Other Services)

“Oil price stabilization in the (US) $60 to $70 per barrel [is] having a positive impact on hiring, both contract labor and direct employees, in the oil and gas industry and supporting industries.”
(Professional, Scientific and Technical Services)

“Shortage of qualified labor and services personnel.”
(Public Administration)

“Sales over the last month have been very strong. We are still struggling with the fluctuation in commodity costs and the weakening U.S. dollar.”
(Retail Trade)

“The supply chain is shuttering because of a lack of drivers and equipment causing delays in multiple modes of transportation. The activity to adjust to this is not causing stockouts yet, and we are increasing inventory levels in anticipation of worsening conditions.”
(Wholesale Trade)