No, its not a "services" index

Contrary to what you will read in the press this morning, the Institute of Supply Management (ISM) did not release data this morning on a services index. ISM publishes a manufacturing report and indices and a non-manufacturing report and indices. They are very careful to call the non-manufacturing report as “non-manufacturing”, not “services.” That is because the non-manufacturing report contains more than service industries:

• Agriculture, Forestry, Fishing & Hunting
• Mining
• Construction Educational Services
• Wholesale Trade
• Retail Trade
• Transportation & Warehousing
• Utilities
• Arts, Entertainment & Recreation
• Accommodation & Food Services
• Real Estate, Rental & Leasing
• Management of Companies & Support Services
• Finance & Insurance
• Information
• Health Care & Social Assistance
• Public Administration
• Professional Scientific & Technical Services
• Other Services

Thus, while the index contain service industries, it also covers important non-service and non-manufacturing industries such as agriculture and construction. That is a part of the story that the press misses when it call this a “service” index.
So the next time you read a story about the “services” index remember what it really is. You might also ruminate on how we need a better set of descriptors for this new Information-Innovation-Intangibles (I-Cubed) Economy. “Non-manufacturing” just doesn’t do it. Unfortunately, it plays into and reinforces the outdated and simplistic notion that the economy is divided manufacturing and services. (See my earlier postings on tangible versus intangible producing industries and on the fusion of manufacturing and services.)
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By the way, the latest index for April shows the composite index for non-manufacturing rose by 1.3 percentage points to 57.8 percent in April. This indicates continued growth. However, growth was not even:

The 14 non-manufacturing industries reporting growth in April — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Management of Companies & Support Services; Transportation & Warehousing; Wholesale Trade; Finance & Insurance; Utilities; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Public Administration; Retail Trade; Accommodation & Food Services; Construction; and Educational Services. The four industries reporting contraction in April are: Mining; Other Services; Professional, Scientific & Technical Services; and Information.

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