FOR RELEASE: December 3, 2014


Contact:   Kathleen Lacy
Report On Business® Analyst
ISM®, ROB/Research
Tempe, Arizona
800/888-6276, Ext. 3143
E-mail: klacy@ism.ws


November 2014 Non-Manufacturing ISM® Report On Business®

NMI® at 59.3%

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of November 2014.


Business Activity Index at 64.4%
New Orders Index at 61.4%
Employment Index at 56.7%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in November for the 58th consecutive month, 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, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee. "The NMI® registered 59.3 percent in November, 2.2 percentage points higher than the October reading of 57.1 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 64.4 percent, which is 4.4 percentage points higher than the October reading of 60 percent, reflecting growth for the 64th consecutive month at a faster rate. The New Orders Index registered 61.4 percent, 2.3 percentage points higher than the reading of 59.1 percent registered in October. The Employment Index decreased 2.9 percentage points to 56.7 percent from the October reading of 59.6 percent and indicates growth for the ninth consecutive month. The Prices Index increased 2.3 percentage points from the October reading of 52.1 percent to 54.4 percent, indicating prices increased at a faster rate in November when compared to October. According to the NMI®, 14 non-manufacturing industries reported growth in November. Comments from the majority of respondents indicate that business conditions are on track for continued growth. The respondents have also stated that there is some strain on capacity due to the month-over-month increase in activity."

INDUSTRY PERFORMANCE

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


WHAT RESPONDENTS ARE SAYING ...
  • "Business is good with new technology and products." (Information)
  • "General uptick in demand/spending." (Finance & Insurance)
  • "We are experiencing downward pricing pressures on the price of natural gas as a result of the lower energy prices being driven by OPEC’s lower oil prices." (Mining)
  • "Food cost continues to be a challenge due to cost of goods increases. Beef, produce and turkey markets remain high. Chicken, pork and eggs, although year-over-year are higher; prices have fallen from one month ago." (Accommodation & Food Services)
  • "Business is strong. Many new accounts want to be implemented before year-end so cost reductions can be included." (Professional, Scientific & Technical Services)
  • "We are looking forward to a strong holiday season." (Retail Trade)
  • "We are still seeing continued momentum month-over-month with the strongest area being government accounts." (Wholesale Trade)
ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS*
NOVEMBER 2014
  Non-Manufacturing Manufacturing
Index Series
Index
Nov
Series
Index
Oct
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Nov
Series
Index
Oct
Percent
Point
Change
NMI®/PMI® 59.3 57.1 +2.2 Growing Faster 58 58.7 59.0 -0.3
Business Activity/Production 64.4 60.0 +4.4 Growing Faster 64 64.4 64.8 -0.4
New Orders 61.4 59.1 +2.3 Growing Faster 64 66.0 65.8 +0.2
Employment 56.7 59.6 -2.9 Growing Slower 9 54.9 55.5 -0.6
Supplier Deliveries 54.5 49.5 +5.0 Slower From Faster 1 56.8 56.2 +0.6
Inventories 55.5 49.5 +6.0 Growing From Contracting 1 51.5 52.5 -1.0
Prices 54.4 52.1 +2.3 Increasing Faster 62 44.5 53.5 -9.0
Backlog of Orders 55.5 51.5 +4.0 Growing Faster 7 55.0 53.0 +2.0
New Export Orders 57.0 53.5 +3.5 Growing Faster 8 55.0 51.5 +3.5
Imports 53.5 56.0 -2.5 Growing Slower 9 56.0 54.5 +1.5
Inventory Sentiment 63.0 58.5 +4.5 Too High Faster 210 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 50.0 48.0 +2.0

* Non-Manufacturing ISM® Report On Business® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.



COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY


Commodities Up in Price

Beef; Beef Items (12); Computer Hardware; Gasoline*; Medical IV Products; Medical IV Solutions (2); Paper Products (5); Plastic Products; Produce; and Services.


Commodities Down in Price

Butter; #1 Diesel Fuel (3); #2 Diesel Fuel (4); Fuel (2); Gasoline* (5); Lumber (2); and Soy Products (2).


Commodities in Short Supply

Labor (3); Medical IV Products; and Medical IV Solutions (11).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.



NOVEMBER 2014 NON-MANUFACTURING INDEX SUMMARIES


NMI®

In November, the NMI® registered 59.3 percent, an increase of 2.2 percentage points when compared to October’s reading of 57.1 percent, indicating continued growth in the non-manufacturing sector for the 58th 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®
Nov 2014   59.3 May 2014   56.3
Oct 2014   57.1 Apr 2014   55.2
Sep 2014   58.6 Mar 2014   53.1
Aug 2014   59.6 Feb 2014   51.6
Jul 2014   58.7 Jan 2014   54.0
Jun 2014   56.0 Dec 2013   53.0
Average for 12 months – 56
High – 59.6
Low – 51.6


Business Activity

ISM®’s Business Activity Index in November registered 64.4 percent; an increase of 4.4 percentage points above October’s reading of 60 percent. This represents growth in business activity for the 64th consecutive month. Fourteen industries reported increased business activity, and two industries reported decreased activity for the month of November. Comments from respondents include: "More customer orders" and "New business and planned capital expenditures."

The industries reporting growth of business activity in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Construction; Information; Finance & Insurance; Health Care & Social Assistance; Mining; Management of Companies & Support Services; Public Administration; Other Services; Professional, Scientific & Technical Services; Educational Services; Accommodation & Food Services; and Wholesale Trade. The two industries reporting a decrease in business activity in November are: Arts, Entertainment & Recreation; and Utilities.


Business Activity
%
Higher
%
Same
%
Lower

Index
Nov 2014 37 51 12 64.4
Oct 2014 30 56 14 60.0
Sep 2014 37 50 13 62.9
Aug 2014 35 55 10 65.0


New Orders

ISM®’s Non-Manufacturing New Orders Index grew in November for the 64th consecutive month at a faster rate compared to October. The index registered 61.4 percent, an increase of 2.3 percentage points from the October reading of 59.1 percent. Comments from respondents include: "Year-end spend-down" and "More customer orders".

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


New Orders
%
Higher
%
Same
%
Lower

Index
Nov 2014 37 50 13 61.4
Oct 2014 26 61 13 59.1
Sep 2014 34 55 11 61.0
Aug 2014 29 63 8 63.8


Employment

Employment activity in the non-manufacturing sector grew in November for the ninth consecutive month. ISM®’s Non-Manufacturing Employment Index registered 56.7 percent, which reflects a decrease of 2.9 percentage points when compared to October’s reading of 59.6 percent. Nine industries reported increased employment, and five industries reported decreased employment. Comments from respondents include: "Capital projects approved that strained resource levels" and "Still understaffed for current requirements."

The nine industries reporting an increase in employment in November — listed in order — are: Retail Trade; Construction; Health Care & Social Assistance; Transportation & Warehousing; Finance & Insurance; Wholesale Trade; Accommodation & Food Services; Public Administration; and Professional, Scientific & Technical Services. The five industries reporting a reduction in employment in November are: Arts, Entertainment & Recreation; Educational Services; Mining; Information; and Utilities.


Employment
%
Higher
%
Same
%
Lower

Index
Nov 2014 18 68 14 56.7
Oct 2014 22 67 11 59.6
Sep 2014 24 60 16 58.5
Aug 2014 22 68 10 57.1


Supplier Deliveries

The Supplier Deliveries Index increased and registered 54.5 percent in November, 5 percentage points higher than the 49.5 percent registered in October. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries.

The 10 industries reporting slower deliveries in November — listed in order — are: Transportation & Warehousing; Arts, Entertainment & Recreation; Construction; Wholesale Trade; Accommodation & Food Services; Other Services; Retail Trade; Professional, Scientific & Technical Services; Public Administration; and Health Care & Social Assistance. The two industries reporting faster deliveries in November are: Management of Companies & Support Services; and Finance & Insurance. Six industries reported no change in supplier deliveries in November compared to October.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Nov 2014 13 83 4 54.5
Oct 2014 4 91 5 49.5
Sep 2014 8 88 4 52.0
Aug 2014 8 89 3 52.5


Inventories

ISM®’s Non-Manufacturing Inventories grew after a month of contraction and registered 55.5 percent in November, which is 6 percentage points higher than the 49.5 percent that was reported in October. Of the total respondents in November, 29 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Planned increases" and "replenishing previous month’s sales."

The 10 industries reporting an increase in inventories in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Utilities; Mining; Wholesale Trade; Accommodation & Food Services; Information; Health Care & Social Assistance; Construction; and Transportation & Warehousing. The two industries reporting decreases in inventories in November are: Finance & Insurance; and Public Administration.


Inventories
%
Higher
%
Same
%
Lower

Index
Nov 2014 24 63 13 55.5
Oct 2014 19 61 20 49.5
Sep 2014 18 68 14 52.0
Aug 2014 17 68 15 51.0


Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in November for the 62nd consecutive month. ISM®’s Non-Manufacturing Prices Index for November registered 54.4 percent, 2.3 percentage points higher than the 52.1 percent reported in October. The percentage of respondents reporting higher prices is 14 percent, the percentage indicating no change in prices paid is 74 percent, and 12 percent of the respondents reported lower prices.

Ten non-manufacturing industries reported an increase in prices paid during the month of November, in the following order: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Real Estate, Rental & Leasing; Other Services; Wholesale Trade; Transportation & Warehousing; Information; Construction; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The six industries reporting a decrease in prices paid for the month of November — listed in order — are: Mining; Utilities; Management of Companies & Support Services; Educational Services; Finance & Insurance; and Public Administration.


Prices
%
Higher
%
Same
%
Lower

Index
Nov 2014 14 74 12 54.4
Oct 2014 15 71 14 52.1
Sep 2014 16 75 9 55.2
Aug 2014 23 66 11 57.7

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.



Backlog of Orders

ISM®’s Non-Manufacturing Backlog of Orders Index grew in November for the seventh consecutive month. The index registered 55.5 percent, which is 4 percentage points higher than the 51.5 percent that was reported in October. Of the total respondents in November, 36 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in November — listed in order — are: Real Estate, Rental & Leasing; Construction; Finance & Insurance; Retail Trade; Management of Companies & Support Services; Professional, Scientific & Technical Services; Accommodation & Food Services; and Health Care & Social Assistance. The four industries reporting a decrease in order backlogs in November are: Utilities; Information; Wholesale Trade; and Public Administration.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Nov 2014 18 75 7 55.5
Oct 2014 14 75 11 51.5
Sep 2014 14 76 10 52.0
Aug 2014 19 71 10 54.5


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 grew in November for the eighth consecutive month. The New Export Orders Index for November registered 57 percent, which is 3.5 percentage points higher than the 53.5 percent reported in October. Of the total respondents in November, 65 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The nine industries reporting an increase in new export orders in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Retail Trade; Management of Companies & Support Services; Information; Finance & Insurance; Wholesale Trade; Professional, Scientific & Technical Services; and Accommodation & Food Services. The two industries reporting a decrease in export orders in November are: Arts, Entertainment & Recreation; and Utilities.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Nov 2014 23 68 9 57.0
Oct 2014 12 83 5 53.5
Sep 2014 20 75 5 57.5
Aug 2014 13 79 8 52.5


Imports

The ISM® Non-Manufacturing Imports Index grew in November for the ninth consecutive month. This month’s reading at 53.5 percent is 2.5 percentage points lower than the 56 percent that was reported in October. Fifty-eight percent of respondents reported that they do not use, or do not track the use of, imported materials.

The six industries reporting an increase in imports for the month of November — listed in order — are: Real Estate, Rental & Leasing; Information; Public Administration; Management of Companies & Support Services; Wholesale Trade; and Retail Trade. The three industries reporting a decrease in imports for the month of November are: Arts, Entertainment & Recreation; Finance & Insurance; and Agriculture, Forestry, Fishing & Hunting. Eight industries reported no change in imports in November compared to October.


Imports
%
Higher
%
Same
%
Lower

Index
Nov 2014 15 77 8 53.5
Oct 2014 18 76 6 56.0
Sep 2014 12 81 7 52.5
Aug 2014 8 86 6 51.0


Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in November registered 63 percent, which is 4.5 percentage points higher than the 58.5 percent reported in October. This indicates that respondents believe their inventories are still too high at this time. In November, 30 percent of respondents said their inventories were too high, 4 percent said their inventories were too low, and 66 percent said their inventories were about right.

The 13 industries reporting a feeling that their inventories are too high in November — listed in order — are: Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Wholesale Trade; Utilities; Finance & Insurance; Professional, Scientific & Technical Services; Transportation & Warehousing; Information; Public Administration; Retail Trade; and Health Care & Social Assistance. The only industry reporting a feeling that their inventory is too low in November is: Construction.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Nov 2014 30 66 4 63.0
Oct 2014 23 71 6 58.5
Sep 2014 27 66 7 60.0
Aug 2014 20 70 10 55.0


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. The data 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; 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 subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The NMI® (Non-Manufacturing Index) 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® survey is sent out to Non-Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Non-Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

The Non-Manufacturing ISM® Report On Business® is published monthly by Institute for Supply Management®, the first supply institute in the world. Founded in 1915, ISM®'s mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. By executing and extending its mission through education, research, standards of excellence and information dissemination — including the renowned monthly ISM® Report On Business® — ISM® maintains a strong global influence among individuals and organizations. ISM® is a not-for-profit educational association that serves professionals with an interest in supply management who live and work in more than 80 countries.

The full text version of the Non-Manufacturing ISM® Report On Business® is posted on ISM®'s website 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 December 2014 data will be released at 10:00 a.m. (ET) on Tuesday, January 6, 2015.



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