Economic activity in the non-manufacturing sector grew in August
for the eighth consecutive month, say the nations purchasing and supply
executives in the latest Non-Manufacturing ISM Report On Business.
“Business is pretty stagnant; starting to see price erosion in our
selling markets.”
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of
the Institute for Supply Management Non-Manufacturing Business Survey
Committee; and senior vice president supply management for Hilton
Worldwide. The NMI (Non-Manufacturing Index) registered 51.5 percent in
August, 2.8 percentage points lower than the 54.3 percent registered in
July, indicating continued growth in the non-manufacturing sector but at
a slower rate. The Non-Manufacturing Business Activity Index decreased 3
percentage points to 54.4 percent, reflecting growth for the ninth
consecutive month, but at a slower rate than in July. The New Orders
Index decreased 4.3 percentage points to 52.4 percent, and the
Employment Index decreased 2.7 percentage points to 48.2 percent,
reflecting contraction after one month of growth. The Prices Index
increased 7.6 percentage points to 60.3 percent in August, indicating
that prices increased significantly in July. According to the NMI, nine
non-manufacturing industries reported growth in August. Respondents
comments continue to be mixed about business conditions and the state of
the overall economy.
INDUSTRY PERFORMANCE (Based on the NMI)
The nine industries reporting growth in August based on the NMI
composite index listed in order are: Arts, Entertainment &
Recreation; Construction; Real Estate, Rental & Leasing; Educational
Services; Transportation & Warehousing; Finance & Insurance;
Accommodation & Food Services; Information; and Wholesale Trade. The
eight industries reporting contraction in August listed in order
are: Agriculture, Forestry, Fishing & Hunting; Mining; Professional,
Scientific & Technical Services; Management of Companies & Support
Services; Utilities; Retail Trade; Health Care & Social Assistance; and
Public Administration.
WHAT RESPONDENTS ARE SAYING
In general, sales have increased slightly compared to the same period
last year. However, [sales] are still significantly less than the same
period two years ago. (Public Administration)
Continuing to show signs of positive growth. (Construction)
Business is pretty stagnant; starting to see price erosion in our
selling markets. (Agriculture, Forestry, Fishing & Hunting)
Due to general economic conditions, we are finding more aggressive
pricing and deals to win business in the competitive marketplace.
(Health Care & Social Assistance)
We are anticipating a slowdown in the third and fourth quarter of
this year, with no signs of recovery for the next few quarters.
(Professional, Scientific & Technical Services)
Purchasing has been cut back to meet expenses. As a result, some
segments of company revenue have been negatively impacted. (Retail
Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON
OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS(a)
AUGUST
2010
Index
Non-Manufacturing
Manufacturing
Series
Index
August
Series
Index
July
Percent
Point
Change
Direction
Rate of
Change
Trend(b)
(Months)
Series
Index
August
Series
Index
July
Percent
Point
Change
NMI/PMI
51.5
54.3
-2.8
Growing
Slower
8
56.3
55.5
+0.8
Business Activity/
Production
54.4
57.4
-3.0
Growing
Slower
9
59.9
57.0
+2.9
New Orders
52.4
56.7
-4.3
Growing
Slower
12
53.1
53.5
-0.4
Employment
48.2
50.9
-2.7
Contracting
From Growing
1
60.4
58.6
+1.8
Supplier Deliveries
51.0
52.0
-1.0
Slowing
Slower
5
56.6
58.3
-1.7
Inventories
53.5
55.5
-2.0
Growing
Slower
5
51.4
50.2
+1.2
Prices
60.3
52.7
+7.6
Increasing
Faster
13
61.5
57.5
+4.0
Backlog of Orders
50.5
52.0
-1.5
Growing
Slower
4
51.5
54.5
-3.0
New Export Orders
46.5
52.0
-5.5
Contracting
From Growing
1
55.5
56.5
-1.0
Imports
50.5
48.0
+2.5
Growing
From Contracting
1
56.5
52.5
+4.0
Inventory Sentiment
60.0
59.0
+1.0
Too High
Faster
159
N/A
N/A
N/A
Customers Inventories
N/A
N/A
N/A
N/A
N/A
N/A
43.5
39.0
+4.5
(a) Non-Manufacturing ISM Report On Business
data is seasonally adjusted for Business Activity, New Orders,
Prices and Employment. Manufacturing ISM Report On Business
data is seasonally adjusted for New Orders, Production, Employment,
Supplier Deliveries and Inventories.
(b) Number of months moving in current direction
COMMODITIES REPORTED UP / DOWN IN
PRICE, and IN SHORT SUPPLY
Commodities Up in Price
Bacon; Beef (5); Butter; Chicken; Coated Groundwood (2); Dairy; Diesel
Fuel; #2 Diesel Fuel (2); Freight Charges (2); Fuel (8); Gasoline (2);
Linen; Pharmacy Products (2); Pork; and Transportation Costs.
Commodities Down in Price
No commodities are reported down in price.
Commodities in Short Supply
Coated Groundwood (2) is the only commodity reported in short supply.
Note: The number of consecutive months the commodity is listed is
indicated after each item.
AUGUST 2010 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
In August, the NMI registered 51.5 percent, indicating continued growth
in the non-manufacturing sector for the eighth consecutive month. A
reading above 50 percent indicates the non-manufacturing sector economy
is generally expanding; below 50 percent indicates the non-manufacturing
sector is generally contracting.
NMI HISTORY
Month
NMI
Month
NMI
Aug 2010
51.5
Feb 2010
53.0
Jul 2010
54.3
Jan 2010
50.5
Jun 2010
53.8
Dec 2009
49.8
May 2010
55.4
Nov 2009
48.4
Apr 2010
55.4
Oct 2009
50.1
Mar 2010
55.4
Sep 2009
50.1
Average for 12 months 52.3
High 55.4
Low 48.2
Business Activity
ISMs Non-Manufacturing Business Activity Index in August registered
54.4 percent, a decrease of 3 percentage points when compared to the
57.4 percent registered in July. Seven industries reported increased
business activity, and six industries reported decreased activity for
the month of August. Five industries reported no change from July.
Comments from respondents include: Spend trending up in services and
technology and Orders delayed or cancelled; loss of orders due to
pricing pressures.
The industries reporting growth of business activity in August listed
in order are: Arts, Entertainment & Recreation; Construction;
Transportation & Warehousing; Accommodation & Food Services; Educational
Services; Finance & Insurance; and Health Care & Social Assistance. The
industries reporting decreased business activity in August listed in
order are: Agriculture, Forestry, Fishing & Hunting; Management of
Companies & Support Services; Professional, Scientific & Technical
Services; Retail Trade; Public Administration; and Mining.
Business Activity
%Higher
%Same
%Lower
Index
Aug 2010
27
53
20
54.4
Jul 2010
27
57
16
57.4
Jun 2010
35
56
9
58.1
May 2010
38
53
9
61.1
New Orders
ISMs Non-Manufacturing New Orders Index grew in August for the 12th
consecutive month. The index registered 52.4 percent, which is a
decrease of 4.3 percentage points from the 56.7 percent reported in
July. Comments from respondents include: More requisitions for goods
and services and Summer slowdown and sluggish economy.
The nine industries reporting growth of new orders in August listed in
order are: Arts, Entertainment & Recreation; Construction; Finance &
Insurance; Accommodation & Food Services; Transportation & Warehousing;
Information; Educational Services; Public Administration; and Wholesale
Trade. The eight industries reporting contraction of new orders in
August listed in order are: Mining; Agriculture, Forestry, Fishing &
Hunting; Management of Companies & Support Services; Other Services;
Professional, Scientific & Technical Services; Utilities; Retail Trade;
and Health Care & Social Assistance.
New Orders
%Higher
%Same
%Lower
Index
Aug 2010
22
61
17
52.4
Jul 2010
29
54
17
56.7
Jun 2010
30
56
14
54.4
May 2010
35
52
13
57.1
Employment
Employment activity in the non-manufacturing sector contracted in August
after growing in July. July represented the second time in the past four
months, and only the second time since December 2007, that the index has
expanded. ISMs Non-Manufacturing Employment Index for August registered
48.2 percent. This reflects a decrease of 2.7 percentage points when
compared to the 50.9 percent registered in July. Three industries
reported increased employment, 10 industries reported decreased
employment, and five industries reported unchanged employment compared
to July. Comments from respondents include: Planned downsizing due to
changing business model and Holding the line on no new hires.
The industries reporting an increase in employment in August are: Arts,
Entertainment & Recreation; Finance & Insurance; and Information. The
industries reporting a reduction in employment in August listed in
order are: Mining; Accommodation & Food Services; Health Care & Social
Assistance; Utilities; Retail Trade; Professional, Scientific &
Technical Services; Public Administration; Educational Services;
Transportation & Warehousing; and Wholesale Trade.
Employment
%Higher
%Same
%Lower
Index
Aug 2010
13
69
18
48.2
Jul 2010
17
73
10
50.9
Jun 2010
18
70
12
49.7
May 2010
22
65
13
50.4
Supplier Deliveries
The Supplier Deliveries Index registered 51 percent in August, 1
percentage point lower than the 52 percent registered in July,
indicating that supplier deliveries continued to slow in August. A
reading above 50 percent indicates slower deliveries.
The seven industries reporting slower deliveries in August listed in
order are: Real Estate, Rental & Leasing; Educational Services;
Construction; Other Services; Information; Transportation & Warehousing;
and Finance & Insurance. The three industries reporting faster supplier
deliveries in August are: Utilities; Professional, Scientific &
Technical Services; and Public Administration.
Supplier Deliveries
%Slower
%Same
%Faster
Index
Aug 2010
11
80
9
51.0
Jul 2010
9
86
5
52.0
Jun 2010
10
86
4
53.0
May 2010
10
86
4
53.0
Inventories
ISMs Non-Manufacturing Inventories Index registered 53.5 percent in
August, indicating that inventory levels grew in August for the fifth
consecutive month. Of the total respondents in August, 26 percent
indicated they do not have inventories or do not measure them. Comments
from respondents include: Improved inventory management practices and
Investing to meet short-term increase.
The nine industries reporting an increase in inventories in August
listed in order are: Real Estate, Rental & Leasing; Mining; Arts,
Entertainment & Recreation; Wholesale Trade; Health Care & Social
Assistance; Accommodation & Food Services; Construction; Utilities; and
Finance & Insurance. The five industries reporting decreases in
inventories in August are: Transportation & Warehousing; Retail Trade;
Management of Companies & Support Services; Professional, Scientific &
Technical Services; and Information.
Inventories
%Higher
%Same
%Lower
Index
Aug 2010
19
69
12
53.5
Jul 2010
27
57
16
55.5
Jun 2010
26
65
9
58.5
May 2010
32
61
7
62.5
Prices
Prices paid by non-manufacturing organizations for purchased materials
and services increased in August at a significantly faster rate than in
July. ISMs Non-Manufacturing Prices Index for August registered 60.3
percent, 7.6 percentage points higher than the 52.7 percent reported in
July. In August, the percentage of respondents reporting higher prices
is 19 percent, the percentage indicating no change in prices paid is 77
percent, and 4 percent of the respondents reported lower prices.
In August, nine industries reported an increase in prices paid, in the
following order: Mining; Accommodation & Food Services; Information;
Educational Services; Construction; Professional, Scientific & Technical
Services; Utilities; Finance & Insurance; and Health Care & Social
Assistance. The two industries reporting prices as decreasing for the
month of August are: Management of Companies & Support Services; and
Transportation & Warehousing.
Prices
%Higher
%Same
%Lower
Index
Aug 2010
19
77
4
60.3
Jul 2010
21
71
8
52.7
Jun 2010
27
64
9
53.8
May 2010
35
60
5
60.6
Backlog of Orders
ISMs Non-Manufacturing Backlog of Orders Index grew in August for the
fourth consecutive month. The index registered 50.5 percent, 1.5
percentage points lower than the 52 percent reported in July. Of the
total respondents in August, 45 percent indicated they do not measure
backlog of orders.
The six industries reporting an increase in order backlogs in August
listed in order are: Construction; Transportation & Warehousing;
Health Care & Social Assistance; Accommodation & Food Services;
Wholesale Trade; and Public Administration. The seven industries
reporting lower backlog of orders in August listed in order are:
Utilities; Mining; Other Services; Professional, Scientific & Technical
Services; Retail Trade; Information; and Finance & Insurance.
Backlog of Orders
%Higher
%Same
%Lower
Index
Aug 2010
18
65
17
50.5
Jul 2010
13
78
9
52.0
Jun 2010
20
71
9
55.5
May 2010
18
76
6
56.0
New Export Orders
Orders and requests for services and other non-manufacturing activities
to be provided outside of the United States by domestically based
personnel contracted in August after one month of growth. The New Export
Orders Index for August registered 46.5 percent, which is 5.5 percentage
points lower than the 52 percent registered in July. Of the total
respondents in August, 67 percent indicated they either do not perform,
or do not separately measure, orders for work outside of the United
States.
The four industries reporting an increase in new export orders in August
are: Construction; Other Services; Finance & Insurance; and
Accommodation & Food Services. The four industries reporting a decrease
in export orders in August are: Mining; Agriculture, Forestry, Fishing &
Hunting; Professional, Scientific & Technical Services; and Wholesale
Trade.
New Export Orders
%Higher
%Same
%Lower
Index
Aug 2010
10
73
17
46.5
Jul 2010
15
74
11
52.0
Jun 2010
11
74
15
48.0
May 2010
19
69
12
53.5
Imports
The ISM Non-Manufacturing Imports Index grew in August after two
consecutive months of contraction. The index registered 50.5 percent,
which is 2.5 percentage points higher than the 48 percent reported in
July. In August, 60 percent of respondents reported that they do not
use, or do not track, the use of imported materials.
The two industries reporting an increase in the use of imports in August
are: Information; and Accommodation & Food Services. The two industries
reporting a decrease in imports for the month of August are:
Agriculture, Forestry, Fishing & Hunting; and Retail Trade. Thirteen
industries reported no change for the month of August.
Imports
%Higher
%Same
%Lower
Index
Aug 2010
10
81
9
50.5
Jul 2010
8
80
12
48.0
Jun 2010
7
82
11
48.0
May 2010
15
83
2
56.5
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in August registered
60 percent, which is 1 percentage point higher than the 59 percent
reported in July. This indicates that respondents believe their
inventories are too high at this time. In August, 27 percent of
respondents said their inventories were too high, 7 percent said their
inventories were too low, and 66 percent said their inventories were
about right.
The eight industries reporting a feeling that their inventories are too
high in August listed in order are: Mining; Arts, Entertainment &
Recreation; Accommodation & Food Services; Finance & Insurance;
Information; Professional, Scientific & Technical Services; Wholesale
Trade; and Health Care & Social Assistance. No industries reported that
inventories are too low in August.
Inventory Sentiment
%Too
High
%About
Right
%Too
Low
Index
Aug 2010
27
66
7
60.0
Jul 2010
27
64
9
59.0
Jun 2010
25
68
7
59.0
May 2010
27
67
6
60.5
About this Report
The data presented herein is obtained from a survey of non-manufacturing
supply managers based on information they have collected within their
respective organizations. ISM makes no representation, other than that
stated within this release, regarding the individual company data
collection procedures. Use of the data is in the public domain and
should be compared to all other economic data sources when used in
decision-making.
Data and Method of Presentation
The Non-Manufacturing ISM Report On Business
is based on data compiled from purchasing and supply executives
nationwide. Membership of the Non-Manufacturing Business Survey
Committee is diversified by NAICS, based on each industrys contribution
to gross domestic product (GDP). The Non-Manufacturing Business Survey
Committee responses are divided into the following NAICS code
categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities;
Construction; Wholesale Trade; Retail Trade; Transportation &
Warehousing; Information; Finance & Insurance; Real Estate, Rental &
Leasing; Professional, Scientific & Technical Services; Management of
Companies & Support Services; Educational Services; Health Care & Social
Assistance; Arts, Entertainment & Recreation; Accommodation & Food
Services; Public Administration; and Other Services (services such as
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).
Survey responses reflect the change, if any, in the current month
compared to the previous month. For each of the indicators measured
(Business Activity, New Orders, Backlog of Orders, New Export Orders,
Inventory Change, Inventory Sentiment, Imports, Prices, Employment and
Supplier Deliveries), this report shows the percentage reporting each
response, and the diffusion index. Responses represent raw data and are
never changed. Data is seasonally adjusted for Business Activity, New
Orders, Prices and Employment. All seasonal adjustment factors are
supplied by the U.S. Department of Commerce and are subject annually to
relatively minor changes when conditions warrant them. The remaining
indexes have not indicated significant seasonality.
The NMI is a composite index based on the diffusion indexes for four of
the indicators with equal weights: Business Activity (seasonally
adjusted), New Orders (seasonally adjusted), Employment (seasonally
adjusted) and Supplier Deliveries. Diffusion indexes have the properties
of leading indicators and are convenient summary measures showing the
prevailing direction of change and the scope of change. An index reading
above 50 percent indicates that the non-manufacturing economy in that
index is generally expanding; below 50 percent indicates that it is
generally declining. Supplier Deliveries is an exception. A Supplier
Deliveries Index above 50 percent indicates slower deliveries and below
50 percent indicates faster deliveries.
The Non-Manufacturing ISM Report On Business
is published monthly by the Institute for Supply Management, the
largest supply management research and education organization in the
United States. The Institute for Supply Management, established in
1915, is the largest supply management organization in the world as well
as one of the most respected. ISMs mission is to lead the supply
management profession through its standards of excellence, research,
promotional activities and education.
The full text version of the Non-Manufacturing ISM Report On
Business is posted on ISMs Web site
at www.ism.ws on the third business day of every month after 10:10 a.m.
(ET).
The next Non-Manufacturing ISM Report On Business
featuring the September 2010 data will be released at 10:00 a.m. (ET) on
Tuesday, October 5,
Source: Business Wire
