Home ISM: Service Industries Still Gaining, Retail Included
January 7, 2022
ISM: Service Industries Still Gaining, Retail Included
Posted In: Retail Articles


Economic activity in the services sector, including retail, grew in December for the 19th month in a row, with the Institute for Supply Management Purchasing Managers Index exceeding 60% for the 10th consecutive month, well above the 50% line between growth and contraction.

ISM issued the services report shortly after the organization published its manufacturing report, which also suggested ongoing economic expansion and even the possibility of inflation moderating.

Anthony Nieves, chair of the ISM Services Business Survey Committee, stated, “In December, the services PM registered 62%, 7.1 percentage points below November’s all-time high reading of 69.1%. The Business Activity Index registered 67.6%, a decrease of seven percentage points compared to the reading of 74.6% in November, and the New Orders Index registered 61.5%, 8.2 percentage points lower than the all-time high reading of 69.7% reported in November. “\The Supplier Deliveries Index registered 63.9%, 11.8 percentage points lower than the 75.7% that was reported in November.”

Nieves noted that the Supplier Deliveries is the only ISM index that is inverted, with a reading of above 50% indicating slower deliveries. However, that circumstance is typical when the economy improves and customer demand increases.

“The Prices Index reached its third-highest reading ever at 82.5%, up 0.2 percentage point from the November figure of 82.3%,” Nieves. “Services businesses continue to struggle to replenish inventories, as the Inventories Index, 46.7%, down 1.5 percentage points from November’s reading of 48.2%, and the Inventory Sentiment Index, registering 38.3%, up 1.9 percentage points from November, stayed in contraction or ‘too low’ territory in December

“According to the Services PMI, 16 services industries reported growth. The composite index indicated growth for the 19th consecutive month after a two-month contraction in April and May 2020. Although there was a pullback for most of the indexes in December, the rate of growth remains strong for the services sector, which has expanded for all but two of the last 143 months. Business Survey Committee respondents have indicated that they continue to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials.”

The 16 services industries reporting growth in December, listed in order were: Accommodation & Food Services, Wholesale Trade, Construction, Transportation & Warehousing, Management of Companies & Support Services, Retail Trade, Other Services, Health Care & Social Assistance, Arts, Entertainment & Recreation, Utilities, Professional, Scientific & Technical Services, Public Administration, Finance & Insurance, Information, Real Estate, Rental & Leasing, and Educational Services. The only industry reporting contraction in December was Mining.

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