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April 2008 Non-Manufacturing ISM Report On Business®

FOR RELEASE: May 5, 2008


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


NMI (Non-Manufacturing Index) at 52%

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 April 2008.


Business Activity Index at 50.9%
New Orders Index at 50.1%
Employment Index at 50.8%

(Tempe, Arizona) — 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*; 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*
APRIL 2008
  Non-Manufacturing Manufacturing
Index Series
Index
Apr.
Series
Index
Mar.
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Apr.
Series
Index
Mar.
Percent
Point
Change
NMI/PMI 52.0 49.6 +2.4 Growing From Contracting 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 From Contracting 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 From Contracting 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

* 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

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*; 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*; 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 Business
Activity Index
  Month Business
Activity 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*; 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*; 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*; 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*; 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*; 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*; 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*; 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*; 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*; 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
%Too
High
%About
Right
%Too
Low

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

*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. 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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