Posted by Marcelo Perez

The non-manufacturing sector in the US continued to contract in December, but at a slower pace than the record low established in the previous month, according to the Institute of Supply Management’s non-manufacturing index. The prevailing credit crisis, as well as the continuing housing contraction, has reached all facets of the economy, and the services sector is feeling a lot of the pain. The NMI came in at 40.6%, still deep in recessionary levels, but above the record 37.3% recorded in November. Economists had forecast a number closer to 37%, so the report is somewhat of a bright spot. Readings above 50% indicate growth, and anything below, contraction.

NMI History

Month	NMI	Month	NMI
Dec 2008	40.6	Jun 2008	48.2
Nov 2008	37.3	May 2008	51.7
Oct 2008	44.4	Apr 2008	52.0
Sep 2008	50.2	Mar 2008	49.6
Aug 2008	50.6	Feb 2008	49.3
Jul 2008	49.5	Jan 2008	44.6
Average for 12 months — 47.3 High — 52.0 Low — 37.3

The Business Activity Index also recovered significantly from its record low felt last month. The index came in at 39.6%, up from 33%. The new-orders index climbed to 39.9% from 35.4%, and the employment index rose to 34.7% from 31.3%. The prices paid index declined to 36.0% from 36.6%, a dramatic reversal in prices in a matter of only a few months. In September, that number stood at 70%.

Report Details

Only one industry reported growth in December- Retail Trade.

Contraction was reported in 17 industry segments- Wholesale Trade; Professional, Scientific & Technical Services; Mining; Utilities; Transportation & Warehousing; Educational Services; Agriculture, Forestry, Fishing & Hunting; Other Services*; Arts, Entertainment & Recreation; Management of Companies & Support Services; Public Administration; Finance & Insurance; Accommodation & Food Services; Construction; Real Estate, Rental & Leasing; Health Care & Social Assistance; and Information.

*Other Services include: 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.