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May 2012 Non-Manufacturing ISM Report On Business®

FOR RELEASE: June 5, 2012


Contact: Rose Marie Goupil
ISM, ROB Media Relations
Tempe, Arizona
800/888-6276, Ext. 3015
E-mail: rgoupil@ism.ws


NMI at 53.7%

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 May 2012.


Business Activity Index at 55.6%
New Orders Index at 55.5%
Employment Index at 50.8%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in May for the 29th 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, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI registered 53.7 percent in May, 0.2 percentage point higher than the 53.5 percent registered in April. This indicates continued growth this month at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55.6 percent, which is 1 percentage point higher than the 54.6 percent reported in April, reflecting growth for the 34th consecutive month. The New Orders Index increased by 2 percentage points to 55.5 percent, and the Employment Index decreased by 3.4 percentage points to 50.8 percent, indicating continued growth in employment at a slower rate. The Prices Index decreased 3.8 percentage points to 49.8 percent, indicating lower month-over-month prices for the first time since July 2009. According to the NMI, 13 non-manufacturing industries reported growth in May. The majority of the respondents' comments are positive and optimistic about business conditions and the direction of the economy."

INDUSTRY PERFORMANCE

The 13 non-manufacturing industries reporting growth in May — listed in order — are: Information; Transportation & Warehousing; Accommodation & Food Services; Management of Companies & Support Services; Educational Services; Wholesale Trade; Construction; Retail Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Finance & Insurance; Utilities; and Public Administration. The three industries reporting contraction in May are: Arts, Entertainment & Recreation; Health Care & Social Assistance; and Mining.

WHAT RESPONDENTS ARE SAYING …
  • "Q2 will be a strong quarter for us; the building market is starting to wake up." (Construction)
  • "Increased activity and resources related to projects." (Finance & Insurance)
  • "The upswing in consumer confidence has led to increased business." (Arts, Entertainment & Recreation)
  • "While we tend to remain optimistic about the economy, our numbers do not show a surge in activity. It appears consumers are maintaining their 'let's wait and see' attitude." (Accommodation & Food Services)
  • "Business outlook is flat for the remainder of 2012 with emphasis on cost containment, restructuring and cost-savings projects." (Professional, Scientific & Technical Services)
  • "Business is still strong, but we have seen some softening in growth since mid-March." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
MAY 2012
  Non-Manufacturing Manufacturing
Index Series
Index
May
Series
Index
Apr
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
May
Series
Index
Apr
Percent
Point
Change
NMI/PMI 53.7 53.5 +0.2 Growing Faster 29 53.5 54.8 -1.3
Business Activity/Production 55.6 54.6 +1.0 Growing Faster 34 55.6 61.0 -5.4
New Orders 55.5 53.5 +2.0 Growing Faster 34 60.1 58.2 +1.9
Employment 50.8 54.2 -3.4 Growing Slower 5 56.9 57.3 -0.4
Supplier Deliveries 53.0 51.5 +1.5 Slowing Faster 2 48.7 49.2 -0.5
Inventories 56.0 54.0 +2.0 Growing Faster 4 46.0 48.5 -2.5
Prices 49.8 53.6 -3.8 Decreasing From Increasing 1 47.5 61.0 -13.5
Backlog of Orders 53.0 53.0 0.0 Growing Same 2 47.0 49.5 -2.5
New Export Orders 53.0 58.0 -5.0 Growing Slower 10 53.5 59.0 -5.5
Imports 53.0 56.5 -3.5 Growing Slower 6 53.5 53.5 0.0
Inventory Sentiment 63.0 61.0 +2.0 Too High Faster 180 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 43.5 45.5 -2.0

* 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 and Supplier Deliveries.
** Number of months moving in current direction.


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

Commodities Up in Price

Airfares (5); Beef* (2); Copper Products; Corrugated; Diesel Fuel (4); #1 Diesel Fuel* (6); Fuel (5); Gasoline* (5); Lumber; Office and Computer Supplies (2); and Paper Products (2).

Commodities Down in Price

Beef*; Cheese (2); Computer Equipment/Hardware (2); Consultants; #1 Diesel Fuel*; #2 Diesel Fuel; Gasoline*; Natural Gas (4); Services; and Steel Products.

Commodities in Short Supply

Nuts is the only commodity reported in short supply.

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



MAY 2012 NON-MANUFACTURING INDEX SUMMARIES


NMI

In May, the NMI registered 53.7 percent, indicating continued growth in the non-manufacturing sector for the 29th 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
May 2012 53.7 Nov 2011 52.6
Apr 2012 53.5 Oct 2011 52.6
Mar 2012 56.0 Sep 2011 52.6
Feb 2012 57.3 Aug 2011 53.8
Jan 2012 56.8 Jul 2011 53.4
Dec 2011 53.0 Jun 2011 53.3
Average for 12 months – 54.1
High – 57.3
Low – 52.6

Business Activity

ISM's Non-Manufacturing Business Activity Index in May registered 55.6 percent, 1 percentage point higher than the 54.6 percent registered in April. Ten industries reported increased business activity, and five industries reported decreased activity for the month of May. Comments from respondents include: "Expansion of facilities and capital projects" and "Improved economic environment."

The industries reporting growth of business activity in May — listed in order — are: Information; Accommodation & Food Services; Transportation & Warehousing; Educational Services; Wholesale Trade; Construction; Management of Companies & Support Services; Finance & Insurance; Professional, Scientific & Technical Services; and Public Administration. The industries reporting decreased business activity in May are: Mining; Arts, Entertainment & Recreation; Health Care & Social Assistance; Retail Trade; and Utilities.


Business Activity
%
Higher
%
Same
%
Lower

Index
May 2012 31 55 14 55.6
Apr 2012 34 51 15 54.6
Mar 2012 37 53 10 58.9
Feb 2012 34 52 14 62.6

New Orders

ISM's Non-Manufacturing New Orders Index grew in May for the 34th consecutive month. The index registered 55.5 percent, an increase of 2 percentage points from the 53.5 percent reported in April. Comments from respondents include: "Improving customer demand" and "Expecting strong sales for the rest of 2012."

The 12 industries reporting growth of new orders in May — listed in order — are: Information; Transportation & Warehousing; Retail Trade; Construction; Accommodation & Food Services; Educational Services; Utilities; Management of Companies & Support Services; Finance & Insurance; Wholesale Trade; Professional, Scientific & Technical Services; and Public Administration. The three industries reporting contraction of new orders in May are: Mining; Arts, Entertainment & Recreation; and Health Care & Social Assistance.


New Orders
%
Higher
%
Same
%
Lower

Index
May 2012 31 55 14 55.5
Apr 2012 31 54 15 53.5
Mar 2012 33 57 10 58.8
Feb 2012 31 58 11 61.2

Employment

Employment activity in the non-manufacturing sector grew in May at a slower rate, as ISM's Non-Manufacturing Employment Index registered 50.8 percent. This reflects a decrease of 3.4 percentage points when compared to the 54.2 percent registered in April. Fourteen industries reported increased employment, two industries reported decreased employment, and two industries reported unchanged employment compared to April. Comments from respondents include: "Reduction of excess FTE [full-time equivalent] capacity and organizational consolidation" and "To handle additional work and growth."

The industries reporting an increase in employment in May — listed in order — are: Mining; Management of Companies & Support Services; Real Estate, Rental & Leasing; Accommodation & Food Services; Retail Trade; Information; Transportation & Warehousing; Other Services; Wholesale Trade; Educational Services; Professional, Scientific & Technical Services; Construction; Finance & Insurance; and Public Administration. The industries reporting a reduction in employment in May are: Arts, Entertainment & Recreation; and Health Care & Social Assistance.


Employment
%
Higher
%
Same
%
Lower

Index
May 2012 23 67 10 50.8
Apr 2012 26 65 9 54.2
Mar 2012 24 66 10 56.7
Feb 2012 17 74 9 55.7

Supplier Deliveries

The Supplier Deliveries Index slowed in May for the second consecutive month, following two months of faster deliveries. The index registered 53 percent, which is 1.5 percentage points higher than the 51.5 reported in April. A reading above 50 percent indicates slower deliveries, and below 50 percent indicates faster deliveries.

The eight industries reporting slower deliveries in May — listed in order — are: Wholesale Trade; Real Estate, Rental & Leasing; Educational Services; Retail Trade; Transportation & Warehousing; Construction; Information; and Professional, Scientific & Technical Services. The three industries reporting faster supplier deliveries in May are: Other Services; Finance & Insurance; and Public Administration. Seven industries reported no change in supplier deliveries in May compared to April.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
May 2012 9 88 3 53.0
Apr 2012 8 87 5 51.5
Mar 2012 4 91 5 49.5
Feb 2012 4 91 5 49.5

Inventories

ISM's Non-Manufacturing Inventories Index grew in May for the fourth consecutive month. The index registered 56 percent, which is 2 percentage points higher than the 54 percent reported in April. Of the total respondents in May, 28 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Demand is higher for our products" and "Cyclical ordering for items in inventory."

The nine industries reporting an increase in inventories in May — listed in order — are: Retail Trade; Wholesale Trade; Information; Transportation & Warehousing; Construction; Health Care & Social Assistance; Finance & Insurance; Public Administration; and Utilities. The five industries reporting decreases in inventories in May are: Agriculture, Forestry, Fishing & Hunting; Other Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; and Accommodation & Food Services.


Inventories
%
Higher
%
Same
%
Lower

Index
May 2012 23 66 11 56.0
Apr 2012 24 60 16 54.0
Mar 2012 22 64 14 54.0
Feb 2012 20 67 13 53.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services decreased in May. ISM's Non-Manufacturing Prices Index for May registered 49.8 percent, 3.8 percentage points lower than the 53.6 percent reported in April. This indicates lower month-over-month prices for the first time since July 2009. In May, the percentage of respondents reporting higher prices is 19 percent, the percentage indicating no change in prices paid is 72 percent, and 9 percent of the respondents reported lower prices.

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


Prices
%
Higher
%
Same
%
Lower

Index
May 2012 19 72 9 49.8
Apr 2012 29 64 7 53.6
Mar 2012 40 58 2 63.9
Feb 2012 41 55 4 68.4

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in May for the second consecutive month. The index registered 53 percent, which is the same percentage rate reported in April. Of the total respondents in May, 36 percent indicated they do not measure backlog of orders.

The nine industries reporting an increase in order backlogs in May — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Educational Services; Construction; Retail Trade; Public Administration; Information; Transportation & Warehousing; Finance & Insurance; and Health Care & Social Assistance. The four industries reporting lower backlog of orders in May are: Other Services; Mining; Professional, Scientific & Technical Services; and Wholesale Trade.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
May 2102 16 74 10 53.0
Apr 2012 15 76 9 53.0
Mar 2012 14 71 15 49.5
Feb 2012 20 66 14 53.0

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 grew in May for the 10th consecutive month. The New Export Orders Index for May registered 53 percent, which is 5 percentage points lower than the 58 percent reported in April. Of the total respondents in May, 67 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The five industries reporting an increase in new export orders in May are: Mining; Construction; Information; Transportation & Warehousing; and Professional, Scientific & Technical Services. The three industries reporting a decrease in export orders in May are: Other Services; Wholesale Trade; and Finance & Insurance. Seven industries reported no change in new export orders in May compared to April.


New Export Orders
%
Higher
%
Same
%
Lower

Index
May 2012 17 72 11 53.0
Apr 2012 26 64 10 58.0
Mar 2012 15 75 10 52.5
Feb 2012 24 61 15 54.5

Imports

The ISM Non-Manufacturing Imports Index grew in May for the sixth consecutive month. The index registered 53 percent, which is 3.5 percentage points lower than the 56.5 percent reported in April. Fifty-nine percent of respondents reported that they do not use, or do not track, the use of imported materials.

The five industries reporting an increase in the use of imports in May are: Health Care & Social Assistance; Information; Construction; Retail Trade; and Wholesale Trade. The only industry reporting a decrease in imports for the month of May is Management of Companies & Support Services. Eleven industries reported no change in imports for the month of May compared to April.


Imports
%
Higher
%
Same
%
Lower

Index
May 2012 8 90 2 53.0
Apr 2012 17 79 4 56.5
Mar 2012 18 76 6 56.0
Feb 2012 17 70 13 52.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in May registered 63 percent, which is 2 percentage points higher than the 61 percent reported in April. This indicates that respondents believe their inventories are still too high at this time. In May, 33 percent of respondents said their inventories were too high, 7 percent said their inventories were too low, and 60 percent said their inventories were about right.

The 11 industries reporting a feeling that their inventories are too high in May — listed in order — are: Arts, Entertainment & Recreation; Mining; Management of Companies & Support Services; Other Services; Wholesale Trade; Finance & Insurance; Real Estate, Rental & Leasing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Construction; and Public Administration. The two industries reporting that their inventories are too low in May are: Information; and Retail Trade.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
May 2012 33 60 7 63.0
Apr 2012 30 62 8 61.0
Mar 2012 23 71 6 58.5
Feb 2012 29 65 6 61.5

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 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 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 (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® surveys are 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 reports 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 reports, 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 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 June 2012 data will be released at 10:00 a.m. (ET) on Thursday, July 5, 2012.



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