Economy Watch: Non-Manufacturing Activity Sees Uptick
- Nov 06, 2012
Economic activity in the U.S. non-manufacturing sector grew in October for the 34th consecutive month, according to the latest Non-Manufacturing ISM Report On Business, which was released on Monday. The rate of growth wasn’t quite as fast as during September, but employment in the sector saw an uptick.
The non-manufacturing index was at 54.2 percent in October, declining from 55.1 percent in September (over 50 means growth). However, the employment index increased in October to 54.9 percent, up from 51.1 percent in September. Also, the prices index decreased 2.5 percentage points to 65.6 percent, indicating prices increased at a slower rate in October when compared to September.
Real estate (renting and leasing), as well as construction, were two of the business categories tracked by the ISM that showed expansion for the month. So did 11 other non-manufacturing industries, such as accommodation and food services; transportation and warehousing; health care and social assistance; and retail trade. Five industries reported contraction, such as arts, entertainment and recreation; wholesale trade; and public administration.
Employment Trends Index up
The Conference Board Employment Trends Index increased in October, following a decline in September, according to the organization on Monday. The index now stands at 108.16, up from 107.63 (a downward revision) in September. The October figure is 4.6 percent higher than a year ago.
The index aggregates eight labor-market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly, according to the Conference Board. October’s rise was driven by positive contributions from six of its eight components, including Ratio of Involuntarily Part-time to All Part-time Workers, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Initial Claims for Unemployment Insurance, Number of Temporary Employees, Industrial Production and Real Manufacturing and Trade Sales.
“The Employment Trends Index bounced back in October, but only to the levels of July and August,” Gad Levanon, director of macroeconomic research at the Conference Board, noted in a press statement. “And given the recent sluggishness of economic activity, employment growth is poised to remain slow in the coming months as well.”
Inflation Misperceptions Common
U.S. inflation has been relatively low in recent years, but a study released on Monday by the Federal Reserve indicates that the perception of inflation has outrun actual inflation, at least in many people’s minds. In particular, the Fed asked respondents about a kind of price increases that tend to elicit strong reactions: food inflation. The report noted: “We find that nearly 40 percent of our respondents believe past-year food and beverage price inflation was 7 percent or more, when, in fact, the published measure has not risen as high as 7 percent since 1981.”
On a related note, the price of gas has been retreating in recent weeks, and not even the impact of Sandy seems to slowed down the slide, except for in the directly affected areas. According to the Lundberg Survey, gasoline prices dropped nearly 21 cents a gallon nationwide since Oct. 19, the largest two-week decline since 2008. In California, the drop was 49 cents a gallon.
Wall Street started the week in the black on Monday, but not terrifically so. The Dow Jones Industrial Average gained 19.28 points, or 0.15 percent, while the S&P 500 was up 0.22 percent and the Nasdaq advanced 0.59 percent.