Economic activity in the non-manufacturing sector expanded in
April, say the nation’s purchasing and supply
executives in the latest Non-Manufacturing ISM Report On Business®.
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 Hotels Corporation. “The
NMI (Non-Manufacturing Index) increased 2.4 percentage points to 52
percent, indicating expansion after three consecutive months of
contraction within the non-manufacturing sector for April 2008. The
Non-Manufacturing Business Activity Index decreased 1.3 percentage
points to 50.9 percent. The New Orders Index decreased 0.1 percentage
point to 50.1 percent, and the Employment Index increased 3.9 percentage
points to 50.8 percent. The Prices Index increased 1.3 percentage points
to 72.1 percent in April, indicating a faster rate in price increases
than in March. According to the NMI, 12 non-manufacturing industries
reported growth in April. Members’ comments in
April continue to be mixed and vary by industry. The inflationary
pressures of rising fuel, energy and commodity prices are of major
concern for members.”
INDUSTRY PERFORMANCE (Based on the NMI)
The 12 industries reporting growth in April based on the new NMI
composite index — listed in order —
are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing;
Professional, Scientific & Technical Services; Agriculture, Forestry,
Fishing & Hunting; Mining; Wholesale Trade; Public Administration;
Educational Services; Construction; Utilities; Retail Trade; and
Information. The six industries reporting contraction in April are:
Other Services(c); Transportation & Warehousing; Finance & Insurance;
Accommodation & Food Services; Health Care & Social Assistance; and
Management of Companies & Support Services.
WHAT RESPONDENTS ARE SAYING …
“The financial services sector continues to
deal with global economic conditions that are impacting not only
revenue and earnings, but also buying and sourcing strategies.”
(Finance & Insurance)
“There is a general push by many suppliers
to increase prices (by as much as 5 percent to 10 percent) based upon
the market pressures of fuels and energy.”(Health
Care & Social Assistance)
“Business levels and interest remain quite
high; however, notice some price sensitivity in recent weeks.”
(Professional, Scientific & Technical Services)
“Paper market remains strong.”
(Information)
“First quarter has continued to be positive…”
(Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING
SURVEYS(a)
APRIL 2008
Index
Non-Manufacturing
Manufacturing
SeriesIndexApr.
SeriesIndexMar.
PercentPointChange
Direction
Rate ofChange
Trend(b)(Months)
SeriesIndexApr.
SeriesIndexMar.
PercentPointChange
NMI/PMI
52.0
49.6
+2.4
Growing
FromContracting
1
48.6
48.6
0.0
Business Activity/
Production
50.9
52.2
-1.3
Growing
Slower
3
49.1
48.7
+0.4
New Orders
50.1
50.2
-0.1
Growing
Slower
2
46.5
46.5
0.0
Employment
50.8
46.9
+3.9
Growing
FromContracting
1
45.4
49.2
-3.8
Supplier Deliveries
56.0
49.0
+7.0
Slowing
From Faster
1
54.0
53.6
+0.4
Inventories
47.0
51.5
-4.5
Contracting
From Growing
1
48.1
44.9
+3.2
Prices
72.1
70.8
+1.3
Increasing
Faster
59
84.5
83.5
+1.0
Backlog of Orders
50.0
47.5
+2.5
Unchanged
FromContracting
1
51.5
47.5
+4.0
New Export Orders
48.5
55.0
-6.5
Contracting
From Growing
1
57.5
56.5
+1.0
Imports
50.0
54.5
-4.5
Unchanged
From Growing
1
48.0
45.0
+3.0
Inventory Sentiment
63.0
60.5
+2.5
“Too High”
Faster
131
N/A
N/A
N/A
Customers’ Inventories
N/A
N/A
N/A
N/A
N/A
N/A
45.0
51.0
-6.0
(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
Airfares (2); Alcohol; Beef (2); Car Rentals; Carbon Steel Pipe (2);
Carbon Steel Plate; Coffee; Copier Paper (3); Copper Wire (2); Corn;
Diesel Fuel (7); Eggs (2); Flour; Foodstuffs; Fresh Dairy; Fuel (15);
Gasoline (8); Hay; Hotel Costs; IT Support; Milk; Natural Gas; Oil (2);
Paper (6); Paper Products (2); Petroleum (2); Plastic Bags (2); Printed
Forms and Papers; Shipping Costs (2); Steel (2); Wheat; and Wood
Shavings.
Commodities Down in Price
Cheese is the only commodity reported down in price.
Commodities in Short Supply
No commodities are reported in short supply.
Note: The number of consecutive months the commodity is listed is
indicated after each item.
APRIL 2008 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
Beginning with the January 2008 Non-Manufacturing Report On Business®,
a composite index is now calculated as an indicator of the overall
economic condition for the non-manufacturing sector. 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. April’s NMI at 52
percent indicates growth in the non-manufacturing sector. 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.
The industries reporting growth in April are: Arts, Entertainment &
Recreation; Real Estate, Rental & Leasing; Professional, Scientific &
Technical Services; Agriculture, Forestry, Fishing & Hunting; Mining;
Wholesale Trade; Public Administration; Educational Services;
Construction; Utilities; Retail Trade; and Information. The industries
reporting contraction in April are: Other Services(c); Transportation &
Warehousing; Finance & Insurance; Accommodation & Food Services; Health
Care & Social Assistance; and Management of Companies & Support Services.
NMI HISTORY
Month
NMI
April 2008
52.0
March 2008
49.6
February 2008
49.3
January 2008
44.6
Business Activity
ISM’s Non-Manufacturing Business Activity
Index in April registered 50.9 percent, indicating a decrease of 1.3
percentage points when compared to the 52.2 percent registered in March.
Eight industries reported increased business activity, and five
industries reported decreased activity for the month of April. Five
industries reported no change from March. Comments from respondents
include: “Increased customer demand”;
“Ramping up for seasonal work”;
and “More requests for services, especially
training.”
The industries reporting growth of business activity in April are:
Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation;
Public Administration; Wholesale Trade; Professional, Scientific &
Technical Services; Educational Services; and Information. The
industries reporting decreased business activity in April are: Other
Services(c); Accommodation & Food Services; Health Care & Social
Assistance; Finance & Insurance; and Management of Companies & Support
Services.
Business Activity
%Higher
%Same
%Lower
Index
April 2008
29
53
18
50.9
March 2008
30
50
20
52.2
February 2008
26
47
27
50.8
January 2008
18
40
42
41.9
THE LAST 12 MONTHS
Month
BusinessActivity Index
Month
BusinessActivity Index
Apr 2008
50.9
Oct 2007
55.5
Mar 2008
52.2
Sep 2007
55.7
Feb 2008
50.8
Aug 2007
56.3
Jan 2008
41.9
Jul 2007
55.9
Dec 2007
54.4
Jun 2007
59.7
Nov 2007
54.6
May 2007
58.4
Average for 12 months – 53.9
High – 59.7
Low – 41.9
New Orders
ISM’s Non-Manufacturing New Orders Index grew
in April for the second consecutive month. The index decreased 0.1
percentage point to 50.1 percent from the 50.2 percent registered in
March. Comments from respondents include: “Continued
growth activity”; “Additional
business with some key existing customers”;
and “Increased demand.”
Industries reporting growth of new orders in April are: Real Estate,
Rental & Leasing; Arts, Entertainment & Recreation; Agriculture,
Forestry, Fishing & Hunting; Utilities; Public Administration;
Professional, Scientific & Technical Services; Wholesale Trade;
Educational Services; Construction; Health Care & Social Assistance; and
Information. The industries reporting contraction of new orders in April
are: Mining; Other Services(c); Accommodation & Food Services;
Management of Companies & Support Services; Transportation &
Warehousing; and Finance & Insurance.
New Orders
%Higher
%Same
%Lower
Index
April 2008
26
57
17
50.1
March 2008
25
52
23
50.2
February 2008
24
50
26
49.6
January 2008
18
46
36
43.5
Employment
Employment activity in the non-manufacturing sector grew in April after
three consecutive months of contraction. ISM’s
Non-Manufacturing Employment Index for April registered 50.8 percent.
This reflects an increase of 3.9 percentage points when compared to the
46.9 percent registered in March. Seven industries reported increased
employment, five industries reported a decrease, and six industries
indicated employment is unchanged from March. Comments from respondents
include: “Adding new positions”;
“Continued growth of business”;
and “Revenues are down so we are not filling
most vacant positions.”
The industries reporting growth in employment in April are: Mining;
Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing &
Hunting; Management of Companies & Support Services; Professional,
Scientific & Technical Services; Construction; and Public
Administration. The industries reporting a reduction in employment in
April are: Other Services(c); Transportation & Warehousing; Health Care
& Social Assistance; Finance & Insurance; and Wholesale Trade.
Employment
%Higher
%Same
%Lower
Index
April 2008
22
61
17
50.8
March 2008
14
66
20
46.9
February 2008
14
63
23
46.9
January 2008
6
70
24
43.9
Supplier Deliveries
Supplier deliveries were slower in April with the index registering 56
percent. A reading above 50 percent indicates slower deliveries.
The industries reporting slowing in supplier deliveries in April are:
Other Services(c); Professional, Scientific & Technical Services; Retail
Trade; Wholesale Trade; Accommodation & Food Services; Health Care &
Social Assistance; and Educational Services. The one industry reporting
faster supplier deliveries in April is Management of Companies & Support
Services.
Supplier Deliveries
%Slower
%Same
%Faster
Index
April 2008
17
78
5
56.0
March 2008
7
84
9
49.0
February 2008
7
86
7
50.0
January 2008
8
82
10
49.0
Inventories
ISM’s Non-Manufacturing Inventories Index
registered 47 percent in April, indicating that inventory levels
contracted in April when compared to March. Of the total respondents in
April, 29 percent indicated they do not have inventories or do not
measure them. Comments from members include: “Obsolete
inventory reduction efforts”; “Conserving
cash”; and “Reducing
the number of SKU’s.”
The industries reporting increases in inventories in April are: Mining;
Real Estate, Rental & Leasing; Arts, Entertainment & Recreation;
Utilities; Other Services(c); Transportation & Warehousing; and Health
Care & Social Assistance. The industries reporting decreases in
inventories in April are: Management of Companies & Support Services;
Agriculture, Forestry, Fishing & Hunting; Retail Trade; Educational
Services; Wholesale Trade; Professional, Scientific & Technical
Services; Information; and Finance & Insurance.
Inventories
%Higher
%Same
%Lower
Index
April 2008
17
60
23
47.0
March 2008
22
59
19
51.5
February 2008
24
52
24
50.0
January 2008
14
61
25
44.5
Prices
Prices paid by non-manufacturing organizations for purchased materials
and services increased in April for the 59th consecutive month. ISM’s
Non-Manufacturing Prices Index for April registered 72.1 percent, 1.3
percentage points higher than March’s index
of 70.8 percent. In April, the percentage of respondents reporting
higher prices is 60 percent. The percentage indicating no change in
prices paid is 38 percent. The percentage of respondents noting lower
prices is at 2 percent.
In April, all 18 industries reported an increase in prices paid in the
following order: Agriculture, Forestry, Fishing & Hunting; Mining; Real
Estate, Rental & Leasing; Educational Services; Management of Companies
& Support Services; Accommodation & Food Services; Other Services(c);
Wholesale Trade; Utilities; Arts, Entertainment & Recreation;
Construction; Information; Professional, Scientific & Technical
Services; Transportation & Warehousing; Finance & Insurance; Public
Administration; Retail Trade; and Health Care & Social Assistance.
Prices
%Higher
%Same
%Lower
Index
April 2008
60
38
2
72.1
March 2008
53
45
2
70.8
February 2008
41
54
5
67.9
January 2008
41
54
5
70.7
Backlog of Orders
ISM’s Non-Manufacturing Backlog of Orders
Index was unchanged at 50 percent in April after seven months of
contraction. The index registered 2.5 percentage points higher than the
47.5 percent reported in March. Of the total respondents in April, 39
percent indicated they do not measure backlog of orders.
The industries reporting an increase in order backlogs in April are:
Mining; Agriculture, Forestry, Fishing & Hunting; Educational Services;
Accommodation & Food Services; Construction; Information; Finance &
Insurance; and Public Administration. The industries reporting lower
backlog of orders in April are: Management of Companies & Support
Services; Retail Trade; Other Services(c); Transportation & Warehousing;
and Wholesale Trade.
Backlog of Orders
%Higher
%Same
%Lower
Index
April 2008
15
70
15
50.0
March 2008
14
67
19
47.5
February 2008
23
53
24
49.5
January 2008
13
66
21
46.0
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 indicated contraction for the month of April. The New Export
Orders Index for April registered 48.5 percent, compared to March’s
index of 55 percent. Of the total respondents in April, 68 percent
indicated they either do not perform, or do not separately measure,
orders for work outside of the United States.
The industries reporting an increase in new export orders in April are:
Arts, Entertainment & Recreation; Professional, Scientific & Technical
Services; Finance & Insurance; and Wholesale Trade. The industries
reporting a decrease in export orders in April are: Management of
Companies & Support Services; Other Services(c); Transportation &
Warehousing; Agriculture, Forestry, Fishing & Hunting; Public
Administration; Retail Trade; and Accommodation & Food Services.
New Export Orders
%Higher
%Same
%Lower
Index
April 2008
18
61
21
48.5
March 2008
26
58
16
55.0
February 2008
16
61
23
46.5
January 2008
21
62
17
52.0
Imports
The ISM Non-Manufacturing Imports Index registered 50 percent in April.
The index is 4.5 percentage points lower than March’s
index of 54.5 percent. In April, 62 percent of respondents reported that
they do not use, or do not track, the use of imported materials.
The industries reporting an increase in the use of imports in April are:
Arts, Entertainment & Recreation; Other Services(c); Finance &
Insurance; and Retail Trade. The industries reporting a decrease in
imports for the month of April are: Public Administration;
Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting;
and Wholesale Trade.
Imports
%Higher
%Same
%Lower
Index
April 2008
16
68
16
50.0
March 2008
20
69
11
54.5
February 2008
18
62
20
49.0
January 2008
10
63
27
41.5
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index increased 2.5
percentage points to 63 percent in April. This indicates a general
feeling among non-manufacturing purchasing and supply executives that
inventory levels are too high and that the feeling is more widespread
than in March. In April, 28 percent of respondents felt their
inventories were too high, 2 percent indicated their inventories were
too low, and 70 percent said that their inventories were about right.
The industries reporting a feeling that their inventories are too high
in April are: Real Estate, Rental & Leasing; Management of Companies &
Support Services; Accommodation & Food Services; Other Services(c);
Wholesale Trade; Retail Trade; Professional, Scientific & Technical
Services; Health Care & Social Assistance; and Finance & Insurance. The
one industry reporting that their inventories are too low is Public
Administration.
Inventory Sentiment
%TooHigh
%AboutRight
%TooLow
Index
April 2008
28
70
2
63.0
March 2008
24
73
3
60.5
February 2008
29
63
8
60.5
January 2008
23
68
9
57.0
(c) 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.
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 industry’s
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; Other Services(c); and Public Administration.
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, the net difference between the number of responses in the
positive economic direction (higher and slower for Supplier Deliveries)
and the negative economic direction (lower and faster for Supplier
Deliveries). 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. ISM’s
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 ISM's 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 May 2008 data will be released at 10:00 a.m. (ET) on
Wednesday, June 4, 2008.
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