March 2010 Non-Manufacturing ISM Report On Business®

FOR RELEASE: April 5, 2010


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 55.4%

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 March 2010.


Business Activity Index at 60%
New Orders Index at 62.3%
Employment Index at 49.8%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in March for the third 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; and senior vice president – supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 55.4 percent in March, 2.4 percentage points higher than the seasonally adjusted 53 percent registered in February, and indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 60 percent, reflecting growth for the fourth consecutive month. The New Orders Index increased 7.3 percentage points to 62.3 percent, and the Employment Index increased 1.2 percentage points to 49.8 percent. The Prices Index increased 2.5 percentage points to 62.9 percent in March, indicating an increase in prices paid from February. According to the NMI, 14 non-manufacturing industries reported growth in March. Respondents' comments are mostly positive about business conditions and the direction of the economy."

INDUSTRY PERFORMANCE (Based on the NMI)

The 14 industries reporting growth in March based on the NMI composite index — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Information; Management of Companies & Support Services; Retail Trade; Other Services; Accommodation & Food Services; Finance & Insurance; Wholesale Trade; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The two industries reporting contraction in March are: Real Estate, Rental & Leasing; and Educational Services.

WHAT RESPONDENTS ARE SAYING ...
  • "Business conditions have returned to normal (pre-recession). Our business is up significantly since 2009. We are very positive about the upcoming year." (Information)
  • "Demand for loans, credit cards, mortgages and equity lending is expected to continue to increase." (Finance & Insurance)
  • "Brisk business activity continues as more projects get 'green light.'" (Utilities)
  • "Observing some relaxation on several fronts regarding spending and hiring. Still very cautious, but making investments where they make sense." (Retail Trade)
  • "Limited funding available for development [and] expansions." (Accommodation & Food Services)
  • "The economy appears to be holding its own; however, state and local funding is projected to decrease next fiscal year." (Educational Services)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
MARCH 2010
  Non-Manufacturing Manufacturing
Index Series
Index
Mar.
Series
Index
Feb.
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Mar.
Series
Index
Feb.
Percent
Point
Change
NMI/PMI 55.4 53.0 +2.4 Growing Faster 3 59.6 56.5 +3.1
Business Activity/Production 60.0 54.8 +5.2 Growing Faster 4 61.1 58.4 +2.7
New Orders 62.3 55.0 +7.3 Growing Faster 7 61.5 59.5 +2.0
Employment 49.8 48.6 +1.2 Contracting Slower 27 55.1 56.1 -1.0
Supplier Deliveries 49.5 53.5 -4.0 Faster From Slowing 1 64.9 61.1 +3.8
Inventories 46.5 45.0 +1.5 Contracting Slower 3 55.3 47.3 +8.0
Prices 62.9 60.4 +2.5 Increasing Faster 8 75.0 67.0 +8.0
Backlog of Orders 55.5 46.0 +9.5 Growing From Contracting 1 58.0 61.0 -3.0
New Export Orders 57.5 47.0 +10.5 Growing From Contracting 1 61.5 56.5 +5.0
Imports 51.0 48.5 +2.5 Growing From Contracting 1 57.0 56.0 +1.0
Inventory Sentiment 52.5 60.0 -7.5 Too High Slower 154 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 39.0 37.0 +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, 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

Airfare (3); Cartons; Copper Fittings; Copper Products; Corrugated Products; #1 Diesel Fuel; #2 Diesel Fuel; Drywall/Gypsum Board; Fuel (3); Gasoline (5); Medical Supplies; Metal Studs; Paper (2); Paper Products; Plastic Bags; Plastic Film; Plastic Resin Products; Produce; Red Bell Peppers; Roofing Shingles; Steel Pipe and Fittings; Steel Products (2); and Tomatoes.

Commodities Down in Price

Beef (2); and Construction Labor.

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.



MARCH 2010 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In March, the NMI registered 55.4 percent, indicating growth in the non-manufacturing sector for the third 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
Mar 2010 55.4 Sep 2009 50.1
Feb 2010 53.0 Aug 2009 48.2
Jan 2010 50.5 Jul 2009 46.7
Dec 2009 49.8 Jun 2009 46.3
Nov 2009 48.4 May 2009 44.5
Oct 2009 50.1 Apr 2009 43.9
Average for 12 months — 48.9
High — 55.4
Low — 43.9

Business Activity

ISM's Non-Manufacturing Business Activity Index in March registered 60 percent, an increase of 5.2 percentage points when compared to the seasonally adjusted 54.8 percent registered in February. Thirteen industries reported increased business activity, and three industries reported decreased activity for the month of March. Two industries reported no change from February. Comments from respondents include: "Seeing an increase in business. Our customers are feeling more optimistic"; and "New year budgets, as well as replacing inventories depleted during 2009."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Mar 2010 37 50 13 60.0
Feb 2010 23 57 20 54.8
Jan 2010 26 44 30 52.2
Dec 2009 26 50 24 53.2

New Orders

ISM's Non-Manufacturing New Orders Index grew in March for the seventh consecutive month. The index registered 62.3 percent, which is an increase of 7.3 percentage points from the seasonally adjusted 55 percent reported in February. Comments from respondents include: "Improving sales trend; capital money flowing with the start of a new year"; "More bids; work starting"; and "Prime selling month."

The 14 industries reporting growth of new orders in March — listed in order — are: Management of Companies & Support Services; Utilities; Information; Mining; Accommodation & Food Services; Retail Trade; Construction; Other Services; Health Care & Social Assistance; Transportation & Warehousing; Public Administration; Wholesale Trade; Finance & Insurance; and Educational Services. The only industry reporting contraction of new orders in March is Real Estate, Rental & Leasing.


New Orders
%
Higher
%
Same
%
Lower

Index
Mar 2010 37 49 14 62.3
Feb 2010 23 59 18 55.0
Jan 2010 26 49 25 54.7
Dec 2009 22 55 23 52.0

Employment

Employment activity in the non-manufacturing sector contracted in March for the 27th consecutive month. ISM's Non-Manufacturing Employment Index for March registered 49.8 percent. This reflects an increase of 1.2 percentage points when compared to the seasonally adjusted 48.6 percent registered in February. Six industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "We are staffing to volume" and "Jobs are not being filled pending budget issues."

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


Employment
%
Higher
%
Same
%
Lower

Index
Mar 2010 16 65 19 49.8
Feb 2010 12 68 20 48.6
Jan 2010 10 62 28 44.6
Dec 2009 9 70 21 43.6

Supplier Deliveries

The Supplier Deliveries Index registered 49.5 percent in March, indicating supplier deliveries were faster in March when compared to February. A reading above 50 percent indicates slower deliveries.

The five industries reporting slower deliveries in March are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Wholesale Trade; and Transportation & Warehousing. The four industries reporting faster supplier deliveries in March are: Information; Utilities; Retail Trade; and Finance & Insurance.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Mar 2010 8 83 9 49.5
Feb 2010 12 83 5 53.5
Jan 2010 9 83 8 50.5
Dec 2009 8 85 7 50.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 46.5 percent in March, indicating that inventory levels contracted in March for the third consecutive month. Of the total respondents in March, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Continued improvement in inventory turns" and "Inventory drawdown."

The five industries reporting an increase in inventories in March are: Other Services; Agriculture, Forestry, Fishing & Hunting; Utilities; Wholesale Trade; and Information. The nine industries reporting decreases in inventories in March — listed in order — are: Transportation & Warehousing; Retail Trade; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Management of Companies & Support Services; Public Administration; Finance & Insurance; Accommodation & Food Services; and Health Care & Social Assistance.


Inventories
%
Higher
%
Same
%
Lower

Index
Mar 2010 21 51 28 46.5
Feb 2010 14 62 24 45.0
Jan 2010 16 61 23 46.5
Dec 2009 21 61 18 51.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in March. ISM's Non-Manufacturing Prices Index for March registered 62.9 percent, 2.5 percentage points higher than the seasonally adjusted 60.4 percent reported in February. In March, the percentage of respondents reporting higher prices is 32 percent, the percentage indicating no change in prices paid is 63 percent, and 5 percent of the respondents reported lower prices.

In March, 14 industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Construction; Mining; Wholesale Trade; Management of Companies & Support Services; Educational Services; Finance & Insurance; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Public Administration; Retail Trade; and Accommodation & Food Services. The only industry reporting prices as decreasing for the month of March is Information.


Prices
%
Higher
%
Same
%
Lower

Index
Mar 2010 32 63 5 62.9
Feb 2010 21 73 6 60.4
Jan 2010 27 64 9 61.2
Dec 2009 19 73 8 59.6

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in March for the first time after four consecutive months of contraction. The index registered 55.5 percent, 9.5 percentage points higher than the 46 percent reported in February. Of the total respondents in March, 47 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in March — listed in order — are: Real Estate, Rental & Leasing; Construction; Utilities; Other Services; Accommodation & Food Services; Wholesale Trade; Finance & Insurance; and Professional, Scientific & Technical Services. The only industry reporting lower backlog of orders in March is Public Administration.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Mar 2010 22 67 11 55.5
Feb 2010 10 72 18 46.0
Jan 2010 13 65 22 45.5
Dec 2009 13 70 17 48.0

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 March after contracting for three consecutive months. The New Export Orders Index for March registered 57.5 percent, which is 10.5 percentage points higher than the 47 percent registered in February. Of the total respondents in March, 72 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 March are: Transportation & Warehousing; Information; Accommodation & Food Services; Wholesale Trade; and Retail Trade. The only industry reporting a decrease in export orders in March is Professional, Scientific & Technical Services.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Mar 2010 21 73 6 57.5
Feb 2010 15 64 21 47.0
Jan 2010 15 62 23 46.0
Dec 2009 13 66 21 46.0

Imports

The ISM Non-Manufacturing Imports Index registered 51 percent, indicating growth for the month of March after two consecutive months of contraction. In the month of March, 62 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The three industries reporting an increase in the use of imports in March are: Information; Mining; and Accommodation & Food Services. The three industries reporting a decrease in imports for the month of March are: Construction; Transportation & Warehousing; and Retail Trade.


Imports
%
Higher
%
Same
%
Lower

Index
Mar 2010 11 80 9 51.0
Feb 2010 11 75 14 48.5
Jan 2010 11 72 17 47.0
Dec 2009 17 71 12 52.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in March registered 52.5 percent. This is 7.5 percentage points lower than the 60 percent reported in February, indicating that respondents believe their inventories are slightly high at this time. In March, 20 percent of respondents said their inventories were too high, 15 percent said their inventories were too low, and 65 percent said their inventories were about right.

The five industries reporting a feeling that their inventories are too high in March are: Other Services; Utilities; Transportation & Warehousing; Accommodation & Food Services; and Health Care & Social Assistance. The three industries reporting that inventories are too low in March are: Management of Companies & Support Services; Retail Trade; and Public Administration.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Mar 2010 20 65 15 52.5
Feb 2010 26 68 6 60.0
Jan 2010 33 63 4 64.5
Dec 2009 23 76 1 61.0

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 April 2010 data will be released at 10:00 a.m. (ET) on Wednesday, May 5, 2010.


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