When all you read is gloom, turn here for a much different perspective.

Tuesday, February 10, 2009

Contraction Also Slowing in Non-Manufacturing Segment

Many of you enjoyed yesterday’s positive summary of the Institute for Supply Management's report on January manufacturing.

You ask for a look at some of the positives found in their non-manufacturing report for January also released last week.

That report is similar in its findings to the manufacturing report. The ISM indexes still indicate contraction in the non-manufacturing sector, but at a slower rate. Even more encouraging is that the rate of decline has now slowed for two months in a row.

In fact, two industries are actually now reporting growth in January. Those segments are Health Care & Social Assistance; and Finance & Insurance.

The industry reps surveyed in each were quoted as saying:

* "Business in general remains strong, and revenues are ahead of budget projections." (Health Care & Social Assistance)
* "Markets are still depressed, but show signs of stabilizing. We may have hit bottom in the U.S..." (Finance & Insurance)

The non-manufacturing index graph is plotted in the graphic. A value less than 50% generally correlates to contraction. Just like the Manufacturing Index, the uptick in the slope of the index indicates decelerating contraction. I’ve included a graph of the manufacturing index for your comparison and to enhance yesterday's summary.

These two additional visuals are my contribution to support the theory that a return to growth by summer is quite feasible.

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