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April 2009 Non-Manufacturing ISM Report On Business®

FOR RELEASE: May 5, 2009


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


NMI (Non-Manufacturing Index) at 43.7%

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 April 2009.


Business Activity Index at 45.2%
New Orders Index at 47%
Employment Index at 37%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector contracted 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) registered 43.7 percent in April, 2.9 percentage points higher than the 40.8 percent registered in March, indicating contraction in the non-manufacturing sector for the seventh consecutive month, but at a slower rate. The Non-Manufacturing Business Activity Index increased 1.1 percentage points to 45.2 percent. The New Orders Index increased 8.2 percentage points to 47 percent, and the Employment Index increased 4.7 percentage points to 37 percent. The Prices Index increased 0.9 percentage point to 40 percent in April, indicating a slightly slower decrease in prices from March. According to the NMI, seven non-manufacturing industries reported growth in April. Respondents' comments are mixed and they vary by company and industry about economic conditions."

INDUSTRY PERFORMANCE (Based on the NMI)

The seven industries reporting growth in April based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Retail Trade; Finance & Insurance; Utilities; Other Services; and Accommodation & Food Services. The 11 industries reporting contraction in April — listed in order — are: Management of Companies & Support Services; Information; Agriculture, Forestry, Fishing & Hunting; Construction; Wholesale Trade; Professional, Scientific & Technical Services; Mining; Transportation & Warehousing; Public Administration; Health Care & Social Assistance; and Educational Services.

WHAT RESPONDENTS ARE SAYING ...
  • "Business is still depressed and there is a lack of confidence." (Professional, Scientific & Technical Services)
  • "Overall there are faint signs of improving business conditions." (Management of Companies & Support Services)
  • "Continued retraction by our customer base, resulting in much lower revenue than anticipated." (Information)
  • "A slight seasonal uptick in demand, but far from where it needs to be. The tone is, however, a little more positive." (Wholesale Trade)
  • "Tight credit markets prevent additional new development projects due to funding." (Accommodation & Food Services)
  • "Although we are not yet ready to say that the business has completely turned, we are seeing some indications that the worst may be over." (Real Estate, Rental & Leasing)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
APRIL 2009
  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 43.7 40.8 +2.9 Contracting Slower 7 40.1 36.3 +3.8
Business Activity/Production 45.2 44.1 +1.1 Contracting Slower 7 40.4 36.4 +4.0
New Orders 47.0 38.8 +8.2 Contracting Slower 7 47.2 41.2 +6.0
Employment 37.0 32.3 +4.7 Contracting Slower 12 34.4 28.1 +6.3
Supplier Deliveries 45.5 48.0 -2.5 Faster Faster 3 44.9 43.6 +1.3
Inventories 43.0 40.0 +3.0 Contracting Slower 8 33.6 32.2 +1.4
Prices 40.0 39.1 +0.9 Decreasing Slower 6 32.0 31.0 +1.0
Backlog of Orders 44.0 41.0 +3.0 Contracting Slower 9 40.5 35.5 +5.0
New Export Orders 48.5 39.0 +9.5 Contracting Slower 6 44.0 39.0 +5.0
Imports 48.5 37.0 +11.5 Contracting Slower 6 42.0 33.0 +9.0
Inventory Sentiment 62.5 60.0 +2.5 Too High Faster 143 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 49.5 54.0 -4.5

* 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

Cheese; and Gasoline (20).

Commodities Down in Price

Beef (8); Carbon Pipe; Chicken; Corrugated Products (3); Fuel Surcharges; Paper; and Stainless Steel.

Commodities in Short Supply

Acetonitrile (4) is the only commodity reported in short supply.

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



APRIL 2009 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In April, the NMI registered 43.7 percent, indicating contraction in the non-manufacturing sector at a slower rate compared to March's reading of 40.8 percent. 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
Apr 2009 43.7 Oct 2008 44.6
Mar 2009 40.8 Sep 2008 50.0
Feb 2009 41.6 Aug 2008 50.4
Jan 2009 42.9 Jul 2008 49.6
Dec 2008 40.1 Jun 2008 48.8
Nov 2008 37.4 May 2008 51.2
Average for 12 months — 45.1
High — 51.2
Low — 37.4

Business Activity

ISM's Non-Manufacturing Business Activity Index in April registered 45.2 percent, an increase of 1.1 percentage points when compared to the 44.1 percent registered in March. Nine industries reported increased business activity, and 7 industries reported decreased activity for the month of April. Two industries reported no change from March. Comments from respondents include: "Increased sales and prospect activity" and "Government intervention with funding — beginning to thaw credit markets."

The industries reporting growth of business activity in April — listed in order — are: Real Estate, Rental & Leasing; Finance & Insurance; Arts, Entertainment & Recreation; Retail Trade; Utilities; Other Services; Transportation & Warehousing; Educational Services; and Accommodation & Food Services. The industries reporting decreased business activity in April — listed in order — are: Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Information; Wholesale Trade; Professional, Scientific & Technical Services; Construction; and Health Care & Social Assistance.


Business Activity
%
Higher
%
Same
%
Lower

Index
Apr 2009 26 46 28 45.2
Mar 2009 24 44 32 44.1
Feb 2009 18 42 40 40.2
Jan 2009 19 43 38 44.2

New Orders

ISM's Non-Manufacturing New Orders Index contracted in April for the seventh consecutive month. The index registered 47 percent, which is an increase of 8.2 percentage points from the 38.8 percent registered in March. Comments from respondents include: "Increase in projects being started"; "Projected higher sales due to promotions"; and "Less demand, business trends down."

The eight industries reporting growth of new orders in April — listed in order — are: Utilities; Real Estate, Rental & Leasing; Finance & Insurance; Arts, Entertainment & Recreation; Retail Trade; Accommodation & Food Services; Health Care & Social Assistance; and Educational Services. The seven industries reporting contraction of new orders in April — listed in order — are: Management of Companies & Support Services; Mining; Agriculture, Forestry, Fishing & Hunting; Information; Construction; Professional, Scientific & Technical Services; and Wholesale Trade.


New Orders
%
Higher
%
Same
%
Lower

Index
Apr 2009 24 54 22 47.0
Mar 2009 18 42 40 38.8
Feb 2009 16 47 37 40.7
Jan 2009 15 47 38 41.6

Employment

Employment activity in the non-manufacturing sector contracted in April for the 15th time in the last 16 months. ISM's Non-Manufacturing Employment Index for April registered 37 percent. This reflects an increase of 4.7 percentage points when compared to the 32.3 percent registered in March. Four industries reported increased employment, 12 industries reported decreased employment, and two industries reported unchanged employment for the month of April. Comments from respondents include: "Some attrition in employee numbers has taken place"; "Right-sizing to sales level"; and "Hiring freeze in place. Almost impossible to fill open positions."

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


Employment
%
Higher
%
Same
%
Lower

Index
Apr 2009 10 58 32 37.0
Mar 2009 7 50 43 32.3
Feb 2009 10 52 38 37.3
Jan 2009 6 53 41 34.4

Supplier Deliveries

Supplier deliveries were faster in April, with the index registering 45.5 percent. This is 2.5 percentage points less than the 48 percent reported in March. A reading above 50 percent indicates slower deliveries.

The one industry reporting slowing in supplier deliveries in April is Educational Services. The industries reporting faster supplier deliveries in April — listed in order — are: Mining; Information; Transportation & Warehousing; Management of Companies & Support Services; Utilities; Finance & Insurance; Accommodation & Food Services; Professional, Scientific & Technical Services; Public Administration; and Wholesale Trade.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Apr 2009 3 85 12 45.5
Mar 2009 7 82 11 48.0
Feb 2009 8 80 12 48.0
Jan 2009 10 83 7 51.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 43 percent in April, indicating that inventory levels contracted in April for the eighth consecutive month. Of the total respondents in April, 31 percent indicated they do not have inventories or do not measure them. Comments from members include: "Have instituted inventory controls — keeping purchases to a minimum while reducing levels of pricing at the same time"; "Lowering of inventory due to slowdown in sales"; and "We are buying less."

The industries reporting an increase in inventories in April are: Mining; Management of Companies & Support Services; and Utilities. The industries reporting decreases in inventories in April — listed in order — are: Educational Services; Wholesale Trade; Transportation & Warehousing; Construction; Accommodation & Food Services; Public Administration; Information; Retail Trade; Health Care & Social Assistance; and Arts, Entertainment & Recreation.


Inventories
%
Higher
%
Same
%
Lower

Index
Apr 2009 12 62 26 43.0
Mar 2009 9 62 29 40.0
Feb 2009 9 60 31 39.0
Jan 2009 16 51 33 41.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services decreased in April for the sixth consecutive month after 65 consecutive months of increases. ISM's Non-Manufacturing Prices Index for April registered 40 percent, 0.9 percentage point higher than the 39.1 percent reported in March. In April, the percentage of respondents reporting higher prices is 9 percent; the percentage indicating no change in prices paid is 70 percent; and 21 percent of the respondents reported lower prices.

In April, three industries reported an increase in prices paid in the following order: Health Care & Social Assistance; Arts, Entertainment & Recreation; and Construction. The 10 industries reporting prices as decreasing for the month of April — listed in order — are: Mining; Management of Companies & Support Services; Information; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Educational Services; Other Services; Accommodation & Food Services; Finance & Insurance; and Wholesale Trade.


Prices
%
Higher
%
Same
%
Lower

Index
Apr 2009 9 70 21 40.0
Mar 2009 12 59 29 39.1
Feb 2009 18 57 25 48.1
Jan 2009 13 55 32 42.5

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in April for the ninth consecutive month. The index registered 44 percent, 3 percentage points higher than the 41 percent reported in March. Of the total respondents in April, 43 percent indicated they do not measure backlog of orders.

Three industries reported an increase in order backlogs in April: Utilities; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The industries reporting lower backlog of orders — listed in order — are: Management of Companies & Support Services; Mining; Wholesale Trade; Educational Services; Construction; Transportation & Warehousing; and Public Administration.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Apr 2009 8 72 20 44.0
Mar 2009 6 70 24 41.0
Feb 2009 3 67 30 36.5
Jan 2009 5 65 30 37.5

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 contracted in April. The New Export Orders Index for April registered 48.5 percent. This is an increase of 9.5 percentage points from March's index of 39 percent. Of the total respondents in April, 74 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The three industries reporting an increase in new export orders in April are: Other Services; Public Administration; and Retail Trade. The industries reporting a decrease in export orders in April are: Finance & Insurance; and Wholesale Trade.

New
Export Orders
%
Higher
%
Same
%
Lower

Index
Apr 2009 12 73 15 48.5
Mar 2009 5 68 27 39.0
Feb 2009 9 62 29 40.0
Jan 2009 14 50 36 39.0

Imports

The ISM Non-Manufacturing Imports Index registered 48.5 percent in April. The index is 11.5 percentage points higher than March's index of 37 percent. In April, 63 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The one industry reporting an increase in the use of imports for the month of April is Health Care & Social Assistance. The industries reporting a decrease in imports for the month of April are: Finance & Insurance; Retail Trade; and Wholesale Trade.


Imports
%
Higher
%
Same
%
Lower

Index
Apr 2009 7 83 10 48.5
Mar 2009 0 74 26 37.0
Feb 2009 2 74 24 39.0
Jan 2009 8 65 27 40.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index increased 2.5 percentage points to 62.5 percent in April, indicating that respondents still believe their inventories are too high at this time. In April, 34 percent of respondents said their inventories were too high, 9 percent said their inventories were too low, and 57 percent said their inventories were about right.

The industries reporting a feeling that their inventories are too high in April — listed in order — are: Information; Other Services; Professional, Scientific & Technical Services; Construction; Real Estate, Rental & Leasing; Management of Companies & Support Services; Wholesale Trade; Utilities; Accommodation & Food Services; Health Care & Social Assistance; and Retail Trade. The industries reporting that their inventories are too low are: Educational Services and Public Administration.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Apr 2009 34 57 9 62.5
Mar 2009 30 60 10 60.0
Feb 2009 39 55 6 66.5
Jan 2009 31 63 6 62.5

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 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 2009 data will be released at 10:00 a.m. (ET) on Wednesday, June 3, 2009.


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