« Trade secrets | Main | The Hollywood wars »
November 6, 2007
Services confusion
This morning, the Institute for Supply Management (ISM) released its index of nonmanufacturing activity -- showing an economic rebound. That is good. But the reporting on this index is bad -- and misleading. The index gets reported as "services" -- as in this story Service Sector's Rebound Reflects Strength in Exports - WSJ.com. It is not a "services" index; it is a non-manufacturing index. There is a huge difference between the two. For example, the ISM non-manufacturing index includes the following industries: Agriculture, Forestry, Fishing & Hunting; Mining, and Construction. In addition, the survey includes both what I call tangible services (involving physical activities) and intangible services (not involving physical activities). It also includes both transactional services (such as Retail trade and Transportation & Warehousing) and informational services (such as Professional, Scientific & Technical Services, and Educational Services).
The ISM gets it right -- this is a measure of the non-manufacturing portion of the economy. It is the reporters and the press who get it wrong. It simply illustrates how locked in to an outmoded mentality we are. If it is not manufacturing, it must be services, right? Wrong, wrong, wrong.
Posted by Ken Jarboe at November 6, 2007 8:49 AM
Trackback Pings
TrackBack URL for this entry:
http://www.athenaalliance.org/mt/mt-tb.cgi/1647