November 2010 Non-Manufacturing ISM Report On Business®

FOR RELEASE: December 3, 2010


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


NMI at 55%

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 November 2010.


Business Activity Index at 57%
New Orders Index at 57.7%
Employment Index at 52.7%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in November for the 11th 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. "The NMI (Non-Manufacturing Index) registered 55 percent in November, 0.7 percentage point higher than the 54.3 percent registered in October, and indicating continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index decreased 1.4 percentage points to 57 percent, reflecting growth for the 12th consecutive month but at a slower rate than in October. The New Orders Index increased 1 percentage point to 57.7 percent, and the Employment Index increased 1.8 percentage points to 52.7 percent, indicating growth in employment for the third consecutive month and the fifth time in the last seven months. The Prices Index decreased 5.1 percentage points to 63.2 percent, indicating that prices increased slower in November. According to the NMI, 10 non-manufacturing industries reported growth in November. Respondents' comments mostly reflect cautious optimism. There is a degree of uncertainty that still remains for some industries and companies."

INDUSTRY PERFORMANCE (Based on the NMI)

The 10 industries reporting growth in November based on the NMI composite index — listed in order — are: Retail Trade; Accommodation & Food Services; Utilities; Other Services; Finance & Insurance; Information; Transportation & Warehousing; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Construction. The six industries reporting contraction in November — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Educational Services; Management of Companies & Support Services; Public Administration; and Wholesale Trade.

WHAT RESPONDENTS ARE SAYING ...
  • "Business remains steady; outlook for fourth quarter is good." (Information)
  • "Trending favorable — see more activity toward additional staff and capital expenditures for 2011." (Finance & Insurance)
  • "Business is stable. Customers are exerting a lot of pressure to lower prices." (Agriculture, Forestry, Fishing & Hunting)
  • "Slight uptick in orders, but nothing to indicate sustainability." (Professional, Scientific & Technical Services)
  • "This business cycle is cause for continued caution for the foreseeable future. We would like to see some settling of unemployment, retail and home sales — none of which appear to be either forthcoming or predictable. We anticipate continued uncertainty and retrenchment." (Retail Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
NOVEMBER 2010
  Non-Manufacturing Manufacturing
Index Series
Index
Nov.
Series
Index
Oct.
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Nov.
Series
Index
Oct.
Percent
Point
Change
NMI/PMI 55.0 54.3 +0.7 Growing Faster 11 56.6 56.9 -0.3
Business Activity/Production 57.0 58.4 -1.4 Growing Slower 12 55.0 62.7 -7.7
New Orders 57.7 56.7 +1.0 Growing Faster 15 56.6 58.9 -2.3
Employment 52.7 50.9 +1.8 Growing Faster 3 57.5 57.7 -0.2
Supplier Deliveries 52.5 51.0 +1.5 Slowing Faster 8 57.2 51.2 +6.0
Inventories 51.5 47.5 +4.0 Growing From Contracting 1 56.7 53.9 +2.8
Prices 63.2 68.3 -5.1 Increasing Slower 16 69.5 71.0 -1.5
Backlog of Orders 51.5 52.0 -0.5 Growing Slower 2 46.0 46.0 0.0
New Export Orders 59.5 55.5 +4.0 Growing Faster 3 57.0 60.5 -3.5
Imports 54.5 54.0 +0.5 Growing Faster 4 53.0 51.5 +1.5
Inventory Sentiment 60.0 61.5 -1.5 Too High Slower 162 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 45.5 44.0 +1.5

* 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

Cable and Cable Products (2); Computer Accessories (2); Consulting Services; Contract Labor; Copper Cable; Copper Wire; Cotton; Cotton Products (3); Data Communications Services; #1 Diesel Fuel (2); #2 Diesel Fuel (5); Fuel (11); Gasoline (2); Office Supplies; Paper; and Toner Cartridges.

Commodities Down in Price

Paper Rolls is the only commodity reported down in price.

Commodities in Short Supply

Coated Freesheet; Coated Groundwood (5); Cotton; and Cotton Products.

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



NOVEMBER 2010 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In November, the NMI registered 55 percent, indicating continued growth in the non-manufacturing sector for the 11th 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
Nov 2010 55.0 May 2010 55.4
Oct 2010 54.3 Apr 2010 55.4
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
Average for 12 months – 53.5
High – 55.4
Low – 49.8

Business Activity

ISM's Non-Manufacturing Business Activity Index in November registered 57 percent, a decrease of 1.4 percentage points when compared to the 58.4 percent registered in October. Ten industries reported increased business activity, and six industries reported decreased activity for the month of November. Two industries reported no change from October. Comments from respondents include: "Higher volume of capital spending projects" and "Very slight downtick."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Nov 2010 28 56 16 57.0
Oct 2010 30 57 13 58.4
Sep 2010 25 56 19 52.8
Aug 2010 27 53 20 54.4

New Orders

ISM's Non-Manufacturing New Orders Index grew in November for the 15th consecutive month. The index registered 57.7 percent, which is an increase of 1 percentage point from the 56.7 percent reported in October. Comments from respondents include: "Increase in business due to end-of-the-year rush" and "Economic confidence."

The 10 industries reporting growth of new orders in November — listed in order — are: Accommodation & Food Services; Retail Trade; Finance & Insurance; Utilities; Professional, Scientific & Technical Services; Information; Other Services; Health Care & Social Assistance; Construction; and Transportation & Warehousing. The four industries reporting contraction of new orders in November are: Management of Companies & Support Services; Wholesale Trade; Public Administration; and Educational Services.


New Orders
%
Higher
%
Same
%
Lower

Index
Nov 2010 32 52 16 57.7
Oct 2010 25 63 12 56.7
Sep 2010 23 62 15 54.9
Aug 2010 22 61 17 52.4

Employment

Employment activity in the non-manufacturing sector grew in November, as ISM's Non-Manufacturing Employment Index registered 52.7 percent. This reflects an increase of 1.8 percentage points when compared to the 50.9 percent registered in October. Eight industries reported increased employment, five industries reported decreased employment, and five industries reported unchanged employment compared to October. Comments from respondents include: "Continuing to fill backlog of positions" and "Hiring freeze lifted."

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


Employment
%
Higher
%
Same
%
Lower

Index
Nov 2010 16 73 11 52.7
Oct 2010 13 69 18 50.9
Sep 2010 15 68 17 50.2
Aug 2010 13 69 18 48.2

Supplier Deliveries

The Supplier Deliveries Index registered 52.5 percent in November, 1.5 percentage points higher than the 51 percent registered in October, indicating that supplier deliveries continued to slow in November. A reading above 50 percent indicates slower deliveries.

The three industries reporting slower deliveries in November are: Transportation & Warehousing; Retail Trade; and Wholesale Trade. The two industries reporting faster supplier deliveries in November are: Agriculture, Forestry, Fishing & Hunting; and Educational Services. Thirteen industries reported no change in supplier deliveries for the month of November.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Nov 2010 7 91 2 52.5
Oct 2010 8 86 6 51.0
Sep 2010 13 84 3 55.0
Aug 2010 11 80 9 51.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 51.5 percent in November, indicating that inventory levels grew in November after two consecutive months of contraction. Of the total respondents in November, 25 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Expect higher sales in November and December" and "Increased business activity."

The nine industries reporting an increase in inventories in November — listed in order — are: Mining; Retail Trade; Other Services; Management of Companies & Support Services; Utilities; Information; Wholesale Trade; Transportation & Warehousing; and Professional, Scientific & Technical Services. The four industries reporting decreases in inventories in November are: Finance & Insurance; Health Care & Social Assistance; Arts, Entertainment & Recreation; and Public Administration.


Inventories
%
Higher
%
Same
%
Lower

Index
Nov 2010 19 65 16 51.5
Oct 2010 16 63 21 47.5
Sep 2010 14 66 20 47.0
Aug 2010 19 69 12 53.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in November. ISM's Non-Manufacturing Prices Index for November registered 63.2 percent, 5.1 percentage points lower than the 68.3 percent reported in October. In November, the percentage of respondents reporting higher prices is 28 percent, the percentage indicating no change in prices paid is 67 percent, and 5 percent of the respondents reported lower prices.

In November, 13 industries reported an increase in prices paid, in the following order: Wholesale Trade; Educational Services; Mining; Arts, Entertainment & Recreation; Utilities; Accommodation & Food Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Construction; Retail Trade; Transportation & Warehousing; Information; and Finance & Insurance. The only industry reporting prices as decreasing for the month of November is Agriculture, Forestry, Fishing & Hunting. Four industries reported no change in prices for the month of November.


Prices
%
Higher
%
Same
%
Lower

Index
Nov 2010 28 67 5 63.2
Oct 2010 32 65 3 68.3
Sep 2010 22 70 8 60.1
Aug 2010 19 77 4 60.3

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in November for the second consecutive month. The index registered 51.5 percent, 0.5 percentage point lower than the 52 percent reported in October. Of the total respondents in November, 45 percent indicated they do not measure backlog of orders.

The six industries reporting an increase in order backlogs in November — listed in order — are: Utilities; Retail Trade; Information; Other Services; Finance & Insurance; and Transportation & Warehousing. The four industries reporting lower backlog of orders in November are: Management of Companies & Support Services; Wholesale Trade; Construction; and Professional, Scientific & Technical Services.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Nov 2010 17 69 14 51.5
Oct 2010 16 72 12 52.0
Sep 2010 15 66 19 48.0
Aug 2010 18 65 17 50.5

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 at a faster rate in November. The New Export Orders Index for November registered 59.5 percent, which is 4 percentage points higher than the 55.5 percent registered in October. Of the total respondents in November, 70 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 November — listed in order — are: Construction; Retail Trade; Accommodation & Food Services; Information; Transportation & Warehousing; and Other Services. The two industries reporting a decrease in export orders in November are: Professional, Scientific & Technical Services; and Wholesale Trade. Six industries reported no change in new export orders for the month of November.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Nov 2010 24 71 5 59.5
Oct 2010 25 61 14 55.5
Sep 2010 23 70 7 58.0
Aug 2010 10 73 17 46.5

Imports

The ISM Non-Manufacturing Imports Index grew in November for the fourth consecutive month. The index registered 54.5 percent, which is 0.5 percentage point higher than the 54 percent reported in October. In November, 56 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The five industries reporting an increase in the use of imports in November are: Information; Other Services; Retail Trade; Accommodation & Food Services; and Wholesale Trade. The only industry reporting a decrease in imports for the month of November is Educational Services. Eleven industries reported no change in imports for the month of November.


Imports
%
Higher
%
Same
%
Lower

Index
Nov 2010 16 77 7 54.5
Oct 2010 15 78 7 54.0
Sep 2010 14 78 8 53.0
Aug 2010 10 81 9 50.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in November registered 60 percent, which is 1.5 percentage points lower than the 61.5 percent reported in October. This indicates that respondents believe their inventories are too high at this time. In November, 27 percent of respondents said their inventories were too high, 7 percent said their inventories were too low, and 66 percent said their inventories were about right.

The 10 industries reporting a feeling that their inventories are too high in November — listed in order — are: Mining; Utilities; Wholesale Trade; Other Services; Retail Trade; Information; Management of Companies & Support Services; Health Care & Social Assistance; Finance & Insurance; and Accommodation & Food Services. The two industries reporting that their inventories are too low in November are: Transportation & Warehousing; and Construction.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Nov 2010 27 66 7 60.0
Oct 2010 28 67 5 61.5
Sep 2010 27 65 8 59.5
Aug 2010 27 66 7 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 December 2010 data will be released at 10:00 a.m. (ET) on Wednesday, January 5, 2011.



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