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FOR RELEASE: July 6, 2009


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


June 2009 Non-Manufacturing ISM Report On Business®

NMI (Non-Manufacturing Index) at 47%

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 June 2009.


Business Activity Index at 49.8%
New Orders Index at 48.6%
Employment Index at 43.4%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector contracted in June, 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 47 percent in June, 3 percentage points higher than the 44 percent registered in May, indicating contraction in the non-manufacturing sector for the ninth consecutive month, but at a slower rate. The Non-Manufacturing Business Activity Index increased 7.4 percentage points to 49.8 percent. The New Orders Index increased 4.2 percentage points to 48.6 percent, and the Employment Index increased 4.4 percentage points to 43.4 percent. The Prices Index increased 6.8 percentage points to 53.7 percent in June, indicating an increase in prices paid from May. This is the first time the index has registered above 50 percent since October 2008. According to the NMI, six non-manufacturing industries reported growth in June. Respondents' comments continue to be mixed and tend to be industry- and company-specific about business conditions."

INDUSTRY PERFORMANCE (Based on the NMI)

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

WHAT RESPONDENTS ARE SAYING ...
  • "Business has improved and holding steady." (Arts, Entertainment & Recreation)
  • "Activity level is flat. Clients are delaying capital spending decisions." (Professional, Scientific & Technical Services)
  • "Economy may be stabilizing. Second half looks more positive than first half." (Information)
  • "Have begun spending government stimulus funding, and expect conditions to gradually improve in the near future." (Public Administration)
  • "Occupancy levels continue to increase at a slow pace." (Accommodation & Food Services)
  • "Activity is still slow and little has changed since last month." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JUNE 2009
  Non-Manufacturing Manufacturing
Index Series
Index
June		 Series
Index
May		 Percent
Point
Change		 Direction Rate
of
Change		 Trend**
(Months)		 Series
Index
June		 Series
Index
May		 Percent
Point
Change
NMI/PMI 47.0 44.0 +3.0 Contracting Slower 9 44.8 42.8 +2.0
Business Activity/Production 49.8 42.4 +7.4 Contracting Slower 9 52.5 46.0 +6.5
New Orders 48.6 44.4 +4.2 Contracting Slower 9 49.2 51.1 -1.9
Employment 43.4 39.0 +4.4 Contracting Slower 14 40.7 34.3 +6.4
Supplier Deliveries 46.0 50.0 -4.0 Faster From Unchanged 1 50.6 49.8 +0.8
Inventories 45.0 47.0 -2.0 Contracting Faster 10 30.8 32.9 -2.1
Prices 53.7 46.9 +6.8 Increasing From Decreasing 1 50.0 43.5 +6.5
Backlog of Orders 46.0 40.0 +6.0 Contracting Slower 11 47.5 48.0 -0.5
New Export Orders 54.5 47.0 +7.5 Growing From Contracting 1 49.5 48.0 +1.5
Imports 47.0 46.0 +1.0 Contracting Slower 8 46.0 42.5 +3.5
Inventory Sentiment 67.0 62.5 +4.5 Too High Faster 145 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 43.5 46.0 -2.5

* 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

Copper Products (2); Diesel Fuel; #2 Diesel Fuel (2); Fuel (2); Gasoline (22); Petroleum Products; Stainless Steel Products; and Tomatoes.

Commodities Down in Price

Beef; Coated Groundwood; Corrugated Products (5); Laptops; and Natural Gas (2).

Commodities in Short Supply

Hand Sanitizers is the only commodity reported in short supply.

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


JUNE 2009 NON-MANUFACTURING INDEX SUMMARIES

NMI (Non-Manufacturing Index)

In June, the NMI registered 47 percent, indicating contraction in the non-manufacturing sector at a slower rate compared to May's reading of 44 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
Jun 2009 47.0 Dec 2008 40.1
May 2009 44.0 Nov 2008 37.4
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
Average for 12 months — 44.3
High — 50.4
Low — 37.4

Business Activity

ISM's Non-Manufacturing Business Activity Index in June registered 49.8 percent, an increase of 7.4 percentage points when compared to the 42.4 percent registered in May. Seven industries reported increased business activity, and eight industries reported decreased activity for the month of June. Three industries reported no change from May. Comments from respondents include: "New capital projects"; "Economy may be improving slightly"; and "Increasing demand."

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


Business Activity		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 28 50 22 49.8
May 2009 20 52 28 42.4
Apr 2009 26 46 28 45.2
Mar 2009 24 44 32 44.1

New Orders

ISM's Non-Manufacturing New Orders Index contracted in June for the ninth consecutive month. The index registered 48.6 percent, which is an increase of 4.2 percentage points from the 44.4 percent registered in May. Comments from respondents include: "Less restrictions on expenditures"; "In line with increase in customers"; and "Increased sales and prospect activity."

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


New Orders		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 29 45 26 48.6
May 2009 23 51 26 44.4
Apr 2009 24 54 22 47.0
Mar 2009 18 42 40 38.8

Employment

Employment activity in the non-manufacturing sector contracted in June for the 17th time in the last 18 months. ISM's Non-Manufacturing Employment Index for June registered 43.4 percent. This reflects an increase of 4.4 percentage points when compared to the 39 percent registered in May. Five industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to May. Comments from respondents include: "Right-sizing staff to sales-run rates"; "Some corporate staff reductions"; and "Layoffs due to slowdown."

The industries reporting an increase in employment in June are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; and Finance & Insurance. The industries reporting a reduction in employment in June — listed in order — are: Educational Services; Wholesale Trade; Professional, Scientific & Technical Services; Retail Trade; Public Administration; Information; Health Care & Social Assistance; and Other Services.


Employment		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 13 64 23 43.4
May 2009 13 58 29 39.0
Apr 2009 10 58 32 37.0
Mar 2009 7 50 43 32.3

Supplier Deliveries

The Supplier Deliveries Index registered 46 percent in June, indicating supplier deliveries were faster than in May, when the index registered 50 percent (a reading at 50 percent indicates an equal balance of non-manufacturing respondents reporting slower and faster deliveries from their suppliers). A reading above 50 percent indicates slower deliveries.

No industry reported slower deliveries in May. The eight industries reporting faster supplier deliveries in June are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Real Estate, Rental & Leasing; Educational Services; Transportation & Warehousing; Retail Trade; Information; and Wholesale Trade.


Supplier Deliveries		 %
Slower		 %
Same		 %
Faster
Index
Jun 2009 3 86 11 46.0
May 2009 7 86 7 50.0
Apr 2009 3 85 12 45.5
Mar 2009 7 82 11 48.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 45 percent in June, indicating that inventory levels contracted in June for the 10th consecutive month. Of the total respondents in June, 28 percent indicated they do not have inventories or do not measure them. Comments from members include: "Continued burn-off of inventory"; "Working to lower inventory investment dollars"; and "More effective procurement practices and inventory control processes."

The four industries reporting an increase in inventories in June are: Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; and Utilities. The 11 industries reporting decreases in inventories in June — listed in order — are: Other Services; Educational Services; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Professional, Scientific & Technical Services; Finance & Insurance; Retail Trade; Information; Public Administration; and Health Care & Social Assistance.


Inventories		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 14 62 24 45.0
May 2009 17 60 23 47.0
Apr 2009 12 62 26 43.0
Mar 2009 9 62 29 40.0

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in June after seven consecutive months of decreases. ISM's Non-Manufacturing Prices Index for June registered 53.7 percent, 6.8 percentage points higher than the 46.9 percent reported in May. In June, the percentage of respondents reporting higher prices is 26 percent, the percentage indicating no change in prices paid is 60 percent, and 14 percent of the respondents reported lower prices.

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


Prices		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 26 60 14 53.7
May 2009 17 68 15 46.9
Apr 2009 9 70 21 40.0
Mar 2009 12 59 29 39.1

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in June for the 11th consecutive month. The index registered 46 percent, 6 percentage points higher than the 40 percent reported in May. Of the total respondents in June, 45 percent indicated they do not measure backlog of orders.

The two industries reporting an increase in order backlogs in June are: Construction and Public Administration. The seven industries reporting lower backlog of orders in June — listed in order — are: Mining; Other Services; Utilities; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Retail Trade.


Backlog of Orders		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 11 70 19 46.0
May 2009 6 68 26 40.0
Apr 2009 8 72 20 44.0
Mar 2009 6 70 24 41.0

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 June for the first time since September 2008. The New Export Orders Index for June registered 54.5 percent. This is an increase of 7.5 percentage points from May's index of 47 percent. Of the total respondents in June, 74 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The six industries reporting an increase in new export orders in June — listed in order — are: Construction; Information; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; and Professional, Scientific & Technical Services. The four industries reporting a decrease in export orders in June are: Mining; Other Services; Agriculture, Forestry, Fishing & Hunting; and Wholesale Trade.

New
Export Orders		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 33 43 24 54.5
May 2009 11 72 17 47.0
Apr 2009 12 73 15 48.5
Mar 2009 5 68 27 39.0

Imports

The ISM Non-Manufacturing Imports Index registered 47 percent in June. The index is 1 percentage point higher than May's index of 46 percent. In June, 64 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 in June is Accommodation & Food Services. The three industries reporting a decrease in imports for the month of June are: Retail Trade; Wholesale Trade; and Health Care & Social Assistance.


Imports		 %
Higher		 %
Same		 %
Lower
Index
Jun 2009 5 84 11 47.0
May 2009 4 84 12 46.0
Apr 2009 7 83 10 48.5
Mar 2009 0 74 26 37.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in June registered 67 percent. This is 4.5 percentage points higher than the 62.5 percent reported in May, indicating that respondents still believe their inventories are too high at this time. In June, 38 percent of respondents said their inventories were too high, 4 percent said their inventories were too low, and 58 percent said their inventories were about right.

The 10 industries reporting a feeling that their inventories are too high in June — listed in order — are: Wholesale Trade; Utilities; Construction; Information; Real Estate, Rental & Leasing; Other Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Accommodation & Food Services; and Retail Trade. The two industries reporting that their inventories are too low in June are: Educational Services and Public Administration.


Inventory Sentiment		 %Too
High		 %About
Right		 %Too
Low
Index
Jun 2009 38 58 4 67.0
May 2009 28 69 3 62.5
Apr 2009 34 57 9 62.5
Mar 2009 30 60 10 60.0

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. 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 July 2009 data will be released at 10:00 a.m. (ET) on Wednesday, August 5, 2009.


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