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The February ISM-New York Report on Business: Moderate Ups and Downs


The February ISM-New York Report on Business was released on March 4th at 9:45am Eastern and is available for download here. Please see the end of this commentary for additional information on the ISM-New York Report on Business.


Report Rundown

In February, New York City purchasing managers indicated improved outlook and short term costs.

Current Business Conditions fell for the 6th consecutive month, coming in at 61.1 in February, down from 63.4 in January. Conditions also reached an 8-month low, looking back to 55.0 in June of 2018.

The Six-Month Outlook increased for the second month in a row, rising 13.2 points to reach 71.5 in February. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Employment, a seasonally adjusted index, rose from an 8-month low of 53.1 in January to 60.7 in February, bringing a three months trend of decreases to an end. 24% of this month's respondents indicated that they were likely to increase their employees this month.

Quantity of Purchases increased significantly in February, rising from a 27-month low 44.7 in January to a 4-month high of 65.4 in February. This marks the largest 1-month increase since the index rose by 21.4 in June of 2007.

In February, top line and forward revenue guidance moved in opposite directions. Current Revenues increased by 16.9 points to reach a 5-month high of 76.9 in February. Expected Revenues fell from 71.4 in January to 65.4 in February.

Prices Paid fell from 72.5 in January to 60.7 in February.



Further Consideration

Deciphering this month’s findings is a tricky matter – like reading tea leaves. Here are a few stories that I can see some support for in the numbers.

Short term: Current business conditions are down for the 6th month in a row, BUT current revenues are up, reaching a 5-month high. So companies are earning, but they consider the general business environment difficult. This could be a result of being understaffed, a competitive sales environment, or an inability to find the right kind of third party to deliver on contracts.

Longer term: The six-month outlook is up for the second month in a row – and not by a tiny bit: 13.2 is a solid move upward. On the other hand, expected revenues are down a moderate 6 points month over month. Both of these indices deal with the same timeframe. So companies have an optimistic view of August, but they expect revenues to be down. Possible explanations include more competition driving down prices. I’d like to say that higher wages for employees or service providers are an explanation, but we’re talking about revenues, not margins, so that doesn’t help.

Purchasing: There is at least some logical alignment between quantity of purchases and prices paid. Prices are down quite a bit, and purchases are correspondingly up.

The big picture: If I were to try and tell one comprehensive story from this month’s numbers, here’s the best I can come up with… Employment being up at the same time as outlook is up may indicate an increase in direct hires rather than spending with third party service providers, something a company might do when they feel less confidence for the future. Forward-looking revenues being down either suggests a summer slowdown or increased competition for business. It’s all a guess, but the good news is that we will get more data in just a few weeks.


Please feel free to share your comments and feedback on this month’s report as well as to share it with anyone from your network that you feel would benefit from the information.

Remember to check back in with me on Monday, March 4th for the release of the February ISM-New York Report on Business.


About the ISM-New York Report on Business

Like ISM’s national report, the ISM-New York Report on Business is compiled as diffusion indices –we add the percent of positive responses to one-half of those responding that conditions remained the same.  A reading of 50.0 means no change from the prior month, greater than 50.0 indicates a faster pace of activity, and less than 50.0 a slower rate. Each month is not so much a reading of the current level of activity as it is an indication of growth or contraction from the previous month.

A note specific to the New York Metro area, where all of this report’s respondants are located: they are predominantly in professional services industries. It is important to keep this in mind when we think about the context for the trends being reported by these particular purchasing managers.

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