--- To enhance the value and performance of procurement and SCM practitioners and their organizations worldwide ---




May 2007 Non-Manufacturing ISM Report On Business®

FOR RELEASE: June 5, 2007


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

Business Activity at 59.7%

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 2007.


New Orders Index at 57.4%
Employment Index at 54.9%

(Tempe, Arizona) — Business activity in the non-manufacturing sector increased at a faster rate in May 2007, 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. "Non-manufacturing business activity increased for the 50th consecutive month in May," Nieves said. He added, "Business Activity, New Orders and Employment increased at a faster rate in May than in April. The Prices Index increased this month to 66.4 percent. Twelve non-manufacturing industries reported increased activity in May. Members' comments in May are mostly positive about business conditions. There is continued concern with rising fuel costs. The overall indication in May is continued economic growth in the non-manufacturing sector at a faster pace than in April."

TOP PERFORMING INDUSTRIES

The 12 industries reporting growth in May — listed in order — are: Mining; Arts, Entertainment & Recreation; Information; Management of Companies & Support Services; Professional, Scientific & Technical Services; Utilities; Finance & Insurance; Health Care & Social Assistance; Public Administration; Other Services*; Retail Trade; and Construction. The two industries reporting decreased activity from April to May are: Accommodation & Food Services and Wholesale Trade.

WHAT RESPONDENTS ARE SAYING ...
  • "Business activity remains stable. Fuel prices remain outrageously high." (Professional, Scientific & Technical Services)
  • "Commercial business is solid...retail very competitive...inverse yield curve squeezing margins." (Finance & Insurance)
  • "Increasing pressure on cost reduction as energy costs remain high." (Accommodation & Food Services)
  • "Housing market is still depressed." (Construction)
  • "Business growing." (Management of Companies & Support Services)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
MAY 2007
  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
Business Activity/Production 59.7 56.0 +3.7 Growing Faster 50 58.3 57.3 +1.0
New Orders 57.4 55.5 +1.9 Growing Faster 50 59.6 58.5 +1.1
Employment 54.9 51.9 +3.0 Growing Faster 34 51.9 53.1 -1.2
Supplier Deliveries 49.5 51.0 -1.5 Faster From Slowing 1 50.3 50.2 +0.1
Inventories 61.0 52.0 +9.0 Growing Faster 4 46.1 46.3 -0.2
Prices 66.4 63.5 +2.9 Increasing Faster 48 71.0 73.0 -2.0
Backlog of Orders 48.0 50.0 -2.0 Contracting From Unchanged 1 52.5 54.5 -2.0
New Export Orders 66.0 55.5 +10.5 Growing Faster 2 59.0 57.0 +2.0
Imports 55.5 52.5 +3.0 Growing Faster 2 57.5 58.0 -0.5
Inventory Sentiment 61.0 60.5 +0.5 "Too High" Faster 120 N/A N/A N/A
Customers' Inventories N/A N/A N/A       48.0 47.0 +1.0

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



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

Commodities Up in Price

Aluminum (2); Barley; Beef; Building Materials; Car Rentals; Copper; Corn; #1 Diesel Fuel (3); #2 Diesel Fuel (3); Fuel (4); Fuel Related; Gasoline (7); Gasoline Related (2); Hotel Costs (12); Lumber — Pine, Plywood, Spruce and Treated; Paper (40); Paper Products (2); Petroleum Products (2); Plastic Resins; Plumbing Supplies; Stainless Steel Products (2); Steel; and Vehicles.

Commodities Down in Price

Office Supplies & Equipment.

Commodities in Short Supply

Barley; Construction Services/Contractors (3); Labor; and Purchasing & Supply Professionals (2).

Note: The number of consecutive months the commodity is listed is indicated after each item.



MAY 2007 NON-MANUFACTURING INDEX SUMMARIES



Business Activity

ISM's Non-Manufacturing Business Activity Index in May registered 59.7 percent compared to the 56 percent registered in April, indicating a faster rate of growth in business activity in May. The implication is that non-manufacturing business activity is continuing to increase for the 50th consecutive month. Twelve industries reported increased business activity, and two reported decreased activity for the month of May.

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


Business Activity
%
Higher
%
Same
%
Lower

Index
May 2007 39 46 15 59.7
April 2007 37 48 15 56.0
March 2007 30 52 18 52.4
February 2007 27 53 20 54.3


THE LAST 12 MONTHS
Month Business
Activity Index
  Month Business
Activity Index
May 2007 59.7   Nov 2006 58.3
Apr 2007 56.0   Oct 2006 57.4
Mar 2007 52.4   Sep 2006 54.6
Feb 2007 54.3   Aug 2006 56.9
Jan 2007 59.0   Jul 2006 55.7
Dec 2006 56.7   Jun 2006 56.9
Average for 12 months — 56.5
High — 59.7
Low — 52.4

New Orders

ISM's Non-Manufacturing New Orders Index increased to 57.4 percent in May from the 55.5 percent registered in April. This indicates continued expansion of new orders at a faster rate than in April. Comments from members include: "Additional 2007 projects approved above initial plan" and "Prime activity time of year."

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


New Orders
%
Higher
%
Same
%
Lower

Index
May 2007 33 54 13 57.4
April 2007 33 53 14 55.5
March 2007 31 48 21 53.8
February 2007 27 55 18 54.8

Employment

Employment activity in the non-manufacturing sector increased at a faster rate in May compared to April. This was the 34th consecutive monthly increase in non-manufacturing employment. ISM's Non-Manufacturing Employment Index for May is 54.9 percent, a 3 percentage point increase from the 51.9 percent reported in April. Twelve industries reported increased employment, one reported a decrease, and five indicated employment is unchanged from April. Comments from respondents include: "More job awards"; "Increase staffing levels for summer"; and "Still filling backlog of positions."

The industries reporting growth in employment in May are: Management of Companies & Support Services; Arts, Entertainment & Recreation; Transportation & Warehousing; Retail Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Utilities; Construction; Finance & Insurance; Wholesale Trade; Information; and Educational Services. The one industry reporting a reduction in employment in May is Mining.


Employment
%
Higher
%
Same
%
Lower

Index
May 2007 23 68 9 54.9
April 2007 19 69 12 51.9
March 2007 17 69 14 50.8
February 2007 18 65 17 52.2

Supplier Deliveries

In May, the delivery performance of suppliers to non-manufacturing organizations was faster than in April. The index registered 49.5 percent, 1.5 percentage points lower than in April, indicating faster supplier deliveries. A reading above 50 percent indicates slower deliveries.

The industries reporting slowing in supplier deliveries in May are: Mining; Transportation & Warehousing; Educational Services; Health Care & Social Assistance; Retail Trade; and Finance & Insurance. The industries reporting faster supplier deliveries in May are: Wholesale Trade; Management of Companies & Support Services; Real Estate, Rental & Leasing; Accommodation & Food Services; Information; and Public Administration.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
May 2007 7 85 8 49.5
April 2007 9 84 7 51.0
March 2007 8 84 8 50.0
February 2007 10 85 5 52.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 61 percent in May, indicating that inventories are growing at a faster rate compared to April. Inventories are expanding for the fourth consecutive month after one month of contraction. Of the total respondents in May, 33 percent indicated they do not have inventories or do not measure them. Comments from members include: "Accumulation of materials for up-coming work"; "We are preparing for summer peak seasons in travel"; and "Inventory growth is proportional to our growth."

The industries reporting increases in inventories in May are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services*; Wholesale Trade; Information; Management of Companies & Support Services; Finance & Insurance; Health Care & Social Assistance; Utilities; and Professional, Scientific & Technical Services. The industries reporting decreases in inventories in May are: Transportation & Warehousing; Retail Trade; and Public Administration.


Inventories
%
Higher
%
Same
%
Lower

Index
May 2007 29 64 7 61.0
April 2007 17 70 13 52.0
March 2007 24 56 20 52.0
February 2007 23 55 22 50.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in May for the 48th consecutive month. ISM's Non-Manufacturing Prices Index for May is 66.4 percent, 2.9 percentage points higher than April's index of 63.5 percent. In May, the percentage of respondents reporting higher prices decreased by 1 percentage points to 41 percent as compared to April. The percentage indicating no change increased from 54 percent in April to 55 percent in May. The percentage of respondents noting prices decreased remained the same at 4 percent in May.

The industries reporting an increase in prices paid in May are: Mining; Educational Services; Accommodation & Food Services; Wholesale Trade; Utilities; Management of Companies & Support Services; Professional, Scientific & Technical Services; Finance & Insurance; Public Administration; Construction; Arts, Entertainment & Recreation; Retail Trade; Transportation & Warehousing; Real Estate, Rental & Leasing; Health Care & Social Assistance; and Information. No industry reported a decrease in prices in May.


Prices
%
Higher
%
Same
%
Lower

Index
May 2007 41 55 4 66.4
April 2007 42 54 4 63.5
March 2007 38 58 4 63.3
February 2007 17 74 9 53.8

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index registered 48 percent in May, 2 percentage points lower than the 50 percent reported in April. Of the total respondents in May, 43 percent indicated they do not measure backlog of orders. Purchasing and supply executives' comments include: "Balance between new orders and cancellations is eroding the backlog" and "We have been eating into our backlog without a replenishment of new orders."

The industries reporting an increase in order backlogs in May are: Real Estate, Rental & Leasing; Construction; Health Care & Social Assistance; and Public Administration. The industries reporting a decrease in order backlogs in May are: Transportation & Warehousing; Wholesale Trade; Other Services*; Retail Trade; Professional, Scientific & Technical Services; and Information.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
May 2007 13 70 17 48.0
April 2007 20 60 20 50.0
March 2007 20 65 15 52.5
February 2007 15 64 21 47.0

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 in May increased for the second consecutive month after a month of contraction. The New Export Orders Index for May is 66 percent, compared to April's index of 55.5 percent. Of the total respondents in May, 69 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 May are: Mining; Arts, Entertainment & Recreation; Finance & Insurance; Educational Services; Information; Other Services*; Retail Trade; Professional, Scientific & Technical Services; and Wholesale Trade. No industry reported a decrease in export orders.

New
Export Orders
%
Higher
%
Same
%
Lower

Index
May 2007 36 60 4 66.0
April 2007 23 65 12 55.5
March 2007 18 61 21 48.5
February 2007 25 68 7 59.0

Imports

In May, the ISM Non-Manufacturing Imports Index registered 55.5 percent, 3 percentage points higher than April's index of 52.5 percent, indicating that use of imports increased in May when compared to April. In May, 65 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 May are: Transportation & Warehousing; Information; Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; and Wholesale Trade. The one industry reporting a decrease in imports for the month of May is Accommodation & Food Services.


Imports
%
Higher
%
Same
%
Lower

Index
May 2007 17 77 6 55.5
April 2007 18 69 13 52.5
March 2007 13 74 13 50.0
February 2007 18 72 10 54.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in May registered 61 percent, 0.5 percentage point higher than the 60.5 percent reported in April. This indicates that non-manufacturing purchasing and supply executives feel a greater discomfort with current levels of inventory in May than they did during April. In May, 26 percent of respondents felt their inventories were too high, 4 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 May are: Construction; Wholesale Trade; Transportation & Warehousing; Management of Companies & Support Services; Other Services*; Professional, Scientific & Technical Services; Accommodation & Food Services; Information; Finance & Insurance; and Public Administration. The one industry reporting that their inventories are too low is Healthcare & Social Assistance.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
May 2007 26 70 4 61.0
April 2007 27 67 6 60.5
March 2007 32 62 6 63.0
February 2007 30 63 7 61.5

*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*; 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. The remaining indexes have not indicated significant seasonality.

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 June 2007 data will be released at 10:00 a.m. (ET) on Thursday July 5, 2007.


Back to Top




Rate and Review this item

Rate this item:



Log in to rate or review this item.