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September 2010 Non-Manufacturing ISM Report On Business®

FOR RELEASE: October 5, 2010


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


NMI at 53.2%

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 September 2010.


Business Activity Index at 52.8%
New Orders Index at 54.9%
Employment Index at 50.2%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in September for the ninth 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 53.2 percent in September, 1.7 percentage points higher than the 51.5 percent registered in August, indicating continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index decreased 1.6 percentage points to 52.8 percent, reflecting growth for the 10th consecutive month, but at a slower rate than in August. The New Orders Index increased 2.5 percentage points to 54.9 percent, and the Employment Index increased 2 percentage points to 50.2 percent, indicating growth in employment for the third time in the last five months. The Prices Index decreased 0.2 percentage point to 60.1 percent, indicating that prices increased in September at a slightly slower rate. According to the NMI, 11 non-manufacturing industries reported growth in September. Respondents' comments continue to be mixed about business conditions, with a slight majority reflecting optimism."

INDUSTRY PERFORMANCE (Based on the NMI)

The 11 industries reporting growth in September based on the NMI composite index — listed in order — are: Management of Companies & Support Services; Information; Professional, Scientific & Technical Services; Wholesale Trade; Utilities; Accommodation & Food Services; Finance & Insurance; Other Services; Health Care & Social Assistance; Retail Trade; and Transportation & Warehousing. The three industries reporting contraction in September are: Mining; Public Administration; and Educational Services.

WHAT RESPONDENTS ARE SAYING ...
  • "General state of the business has not changed in the last three months. The market is still soft for new sales due to financing requirements." (Construction)
  • "Business seems to be flat from last month." (Finance & Insurance)
  • "Signs that the economy may be improving, but our sector is still flat or declining." (Professional, Scientific & Technical Services)
  • "Business activity is generally stable — slightly better than last year." (Accommodation & Food Services)
  • "Third quarter is looking profitable with improving confidence and expectations in the economy. Capital expenditures are being approved." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
SEPTEMBER 2010
  Non-Manufacturing Manufacturing
Index Series
Index
Sept.
Series
Index
August
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Sept.
Series
Index
August
Percent
Point
Change
NMI/PMI 53.2 51.5 +1.7 Growing Faster 9 54.4 56.3 -1.9
Business Activity/Production 52.8 54.4 -1.6 Growing Slower 10 56.5 59.9 -3.4
New Orders 54.9 52.4 +2.5 Growing Faster 13 51.1 53.1 -2.0
Employment 50.2 48.2 +2.0 Growing From Contracting 1 56.5 60.4 -3.9
Supplier Deliveries 55.0 51.0 +4.0 Slowing Faster 6 52.3 56.6 -4.3
Inventories 47.0 53.5 -6.5 Contracting From Growing 1 55.6 51.4 +4.2
Prices 60.1 60.3 -0.2 Increasing Slower 14 70.5 61.5 +9.0
Backlog of Orders 48.0 50.5 -2.5 Contracting From Growing 1 46.5 51.5 -5.0
New Export Orders 58.0 46.5 +11.5 Growing From Contracting 1 54.5 55.5 -1.0
Imports 53.0 50.5 +2.5 Growing Faster 2 56.5 56.5 0.0
Inventory Sentiment 59.5 60.0 -0.5 Too High Slower 160 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 42.5 43.5 -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

Copper; Copper Fittings; Corn; Cotton; Cotton Products; #2 Diesel Fuel (3); Electronic Products; Food and Beverage; Fuel (9); and Paper.

Commodities Down in Price

Carbon Pipe; Gasoline; and Polyethylene Film.

Commodities in Short Supply

Coated Groundwood (3); Coated Freesheet; Medical Supplies; and Tires.

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



SEPTEMBER 2010 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In September, the NMI registered 53.2 percent, indicating continued growth in the non-manufacturing sector for the ninth 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
Sep 2010 53.2 Mar 2010 55.4
Aug 2010 51.5 Feb 2010 53.0
Jul 2010 54.3 Jan 2010 50.5
Jun 2010 53.8 Dec 2009 49.8
May 2010 55.4 Nov 2009 48.4
Apr 2010 55.4 Oct 2009 50.1
Average for 12 months — 52.6
High — 55.4
Low — 48.4

Business Activity

ISM's Non-Manufacturing Business Activity Index in September registered 52.8 percent, a decrease of 1.6 percentage points when compared to the 54.4 percent registered in August. Ten industries reported increased business activity, and four industries reported decreased activity for the month of September. Four industries reported no change from August. Comments from respondents include: "Not as many projects going on as last year" and "Order cancellations, delays [and] pricing pressures."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Sep 2010 25 56 19 52.8
Aug 2010 27 53 20 54.4
Jul 2010 27 57 16 57.4
Jun 2010 35 56 9 58.1

New Orders

ISM's Non-Manufacturing New Orders Index grew in September for the 13th consecutive month. The index registered 54.9 percent, which is an increase of 2.5 percentage points from the 52.4 percent reported in August. Comments from respondents include: "Clients deciding to act and not wait any longer" and "Major and minor capital expenditures."

The eight industries reporting growth of new orders in September — listed in order — are: Management of Companies & Support Services; Information; Accommodation & Food Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Utilities; Finance & Insurance; and Transportation & Warehousing. The seven industries reporting contraction of new orders in September — listed in order — are: Mining; Other Services; Construction; Retail Trade; Educational Services; Wholesale Trade; and Public Administration.


New Orders
%
Higher
%
Same
%
Lower

Index
Sep 2010 23 62 15 54.9
Aug 2010 22 61 17 52.4
Jul 2010 29 54 17 56.7
Jun 2010 30 56 14 54.4

Employment

Employment activity in the non-manufacturing sector grew in September, as ISM's Non-Manufacturing Employment Index registered 50.2 percent. This reflects an increase of 2 percentage points when compared to the 48.2 percent registered in August. Nine industries reported increased employment, six industries reported decreased employment, and three industries reported unchanged employment compared to August. Comments from respondents include: "New sales and business initiatives" and "Increased business activity."

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


Employment
%
Higher
%
Same
%
Lower

Index
Sep 2010 15 68 17 50.2
Aug 2010 13 69 18 48.2
Jul 2010 17 73 10 50.9
Jun 2010 18 70 12 49.7

Supplier Deliveries

The Supplier Deliveries Index registered 55 percent in September, 4 percentage points higher than the 51 percent registered in August, indicating that supplier deliveries continued to slow in September. A reading above 50 percent indicates slower deliveries.

The six industries reporting slower deliveries in September — listed in order — are: Real Estate, Rental & Leasing; Other Services; Wholesale Trade; Educational Services; Retail Trade; and Public Administration. The three industries reporting faster supplier deliveries in September are: Management of Companies & Support Services; Finance & Insurance; and Health Care & Social Assistance.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Sep 2010 13 84 3 55.0
Aug 2010 11 80 9 51.0
Jul 2010 9 86 5 52.0
Jun 2010 10 86 4 53.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 47 percent in September, indicating that inventory levels contracted in September after five consecutive months of growth. Of the total respondents in September, 34 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Not replenishing stock" and "Some of the inventory reduction is due to the seasonality of our business, [and] some due to the softness of the current market."

The three industries reporting an increase in inventories in September are: Professional, Scientific & Technical Services; Information; and Wholesale Trade. The six industries reporting decreases in inventories in September — listed in order — are: Management of Companies & Support Services; Mining; Arts, Entertainment & Recreation; Finance & Insurance; Public Administration; and Retail Trade.


Inventories
%
Higher
%
Same
%
Lower

Index
Sep 2010 14 66 20 47.0
Aug 2010 19 69 12 53.5
Jul 2010 27 57 16 55.5
Jun 2010 26 65 9 58.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in September at a slightly slower rate than in August. ISM's Non-Manufacturing Prices Index for September registered 60.1 percent, 0.2 percentage point lower than the 60.3 percent reported in August. In September, the percentage of respondents reporting higher prices is 22 percent, the percentage indicating no change in prices paid is 70 percent, and 8 percent of the respondents reported lower prices.

In September, 10 industries reported an increase in prices paid, in the following order: Mining; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Information; Arts, Entertainment & Recreation; Retail Trade; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The four industries reporting prices as decreasing for the month of September are: Management of Companies & Support Services; Transportation & Warehousing; Educational Services; and Finance & Insurance.


Prices
%
Higher
%
Same
%
Lower

Index
Sep 2010 22 70 8 60.1
Aug 2010 19 77 4 60.3
Jul 2010 21 71 8 52.7
Jun 2010 27 64 9 53.8

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in September after four consecutive months of growth. The index registered 48 percent, 2.5 percentage points lower than the 50.5 percent reported in August. Of the total respondents in September, 49 percent indicated they do not measure backlog of orders.

The four industries reporting an increase in order backlogs in September are: Educational Services; Retail Trade; Finance & Insurance; and Health Care & Social Assistance. The six industries reporting lower backlog of orders in September — listed in order — are: Mining; Other Services; Public Administration; Construction; Wholesale Trade; and Professional, Scientific & Technical Services.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Sep 2010 15 66 19 48.0
Aug 2010 18 65 17 50.5
Jul 2010 13 78 9 52.0
Jun 2010 20 71 9 55.5

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 grew significantly in September after one month of contraction. The New Export Orders Index for September registered 58 percent, which is 11.5 percentage points higher than the 46.5 percent registered in August. Of the total respondents in September, 67 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 September — listed in order — are: Professional, Scientific & Technical Services; Information; Retail Trade; Other Services; Accommodation & Food Services; and Finance & Insurance. The two industries reporting a decrease in export orders in September are: Agriculture, Forestry, Fishing & Hunting; and Wholesale Trade.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Sep 2010 23 70 7 58.0
Aug 2010 10 73 17 46.5
Jul 2010 15 74 11 52.0
Jun 2010 11 74 15 48.0

Imports

The ISM Non-Manufacturing Imports Index grew in September for the second consecutive month. The index registered 53 percent, which is 2.5 percentage points higher than the 50.5 percent reported in August. In September, 61 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 September are: Other Services; Finance & Insurance; and Accommodation & Food Services. The two industries reporting a decrease in imports for the month of September are: Agriculture, Forestry, Fishing & Hunting; and Retail Trade. Twelve industries reported no change in imports for the month of September.


Imports
%
Higher
%
Same
%
Lower

Index
Sep 2010 14 78 8 53.0
Aug 2010 10 81 9 50.5
Jul 2010 8 80 12 48.0
Jun 2010 7 82 11 48.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in September registered 59.5 percent, which is 0.5 percentage point lower than the 60 percent reported in August. This indicates that respondents believe their inventories are too high at this time. In September, 27 percent of respondents said their inventories were too high, 8 percent said their inventories were too low, and 65 percent said their inventories were about right.

The six industries reporting a feeling that their inventories are too high in September — listed in order — are: Other Services; Wholesale Trade; Finance & Insurance; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Retail Trade. The three industries that reported that their inventories are too low in September are: Accommodation & Food Services; Management of Companies & Support Services; and Construction.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Sep 2010 27 65 8 59.5
Aug 2010 27 66 7 60.0
Jul 2010 27 64 9 59.0
Jun 2010 25 68 7 59.0

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 October 2010 data will be released at 10:00 a.m. (ET) on Wednesday, November 3, 2010.



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