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January 2011 Non-Manufacturing ISM Report On Business®

FOR RELEASE: February 3, 2011


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


NMI at 59.4%

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 January 2011.

This report reflects the U.S. Department of Commerce's recently completed annual adjustments to the seasonal adjustment factors used to calculate the indexes.


Business Activity Index at 64.6%
New Orders Index at 64.9%
Employment Index at 54.5%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in January for the 14th 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 59.4 percent in January, 2.3 percentage points higher than the seasonally adjusted 57.1 percent registered in December (the seasonal adjustment did not change the reading that was originally reported), and indicating continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 1.7 percentage points to 64.6 percent, reflecting growth for the 18th consecutive month and at a faster rate than in December. The New Orders Index increased 3.5 percentage points to 64.9 percent, and the Employment Index increased 1.9 percentage points to 54.5 percent, indicating growth in employment for the fifth consecutive month and at a faster rate. The Prices Index increased 2.6 percentage points to 72.1 percent, indicating that prices increased at a faster rate in January. According to the NMI, 13 non-manufacturing industries reported growth in January. Respondents' comments are mostly positive about business conditions; however, they still remain cautious about the sustainability."

INDUSTRY PERFORMANCE (Based on the NMI)

The 13 industries reporting growth in January based on the NMI composite index — listed in order — are: Mining; Real Estate, Rental & Leasing; Utilities; Transportation & Warehousing; Management of Companies & Support Services; Finance & Insurance; Information; Accommodation & Food Services; Wholesale Trade; Retail Trade; Construction; Other Services; and Health Care & Social Assistance. The five industries reporting contraction in January are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Educational Services; Professional, Scientific & Technical Services; and Public Administration.

WHAT RESPONDENTS ARE SAYING ...
  • "New initiatives creating increase in spending." (Finance & Insurance)
  • "Indications are that business is picking up and that 2011 could see positive growth across many industries. We are seeing an increase in orders at the beginning of the year." (Professional, Scientific & Technical Services)
  • "Starting to see higher prices in many areas. Low inventory levels are leading to longer delivery time frames." (Public Administration)
  • "Business uncertainty seems to be subsiding." (Management of Companies & Support Services)
  • "Business activity is picking up. The challenges in the textile market (cotton/polyester) are significantly impacting price along with the inability to secure pricing for a period longer than two months." (Accommodation & Food Services)
  • "2011 looking better than 2010." (Information)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JANUARY 2011
  Non-Manufacturing Manufacturing
Index Series
Index
Jan.
Series
Index
Dec.
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Jan.
Series
Index
Dec.
Percent
Point
Change
NMI/PMI 59.4 57.1 +2.3 Growing Faster 14 60.8 58.5 +2.3
Business Activity/Production 64.6 62.9 +1.7 Growing Faster 18 63.5 63.0 +0.5
New Orders 64.9 61.4 +3.5 Growing Faster 18 67.8 62.0 +5.8
Employment 54.5 52.6 +1.9 Growing Faster 5 61.7 58.9 +2.8
Supplier Deliveries 53.5 51.5 +2.0 Slowing Faster 10 58.6 56.7 +1.9
Inventories 49.0 52.5 -3.5 Contracting From Growing 1 52.4 51.8 +0.6
Prices 72.1 69.5 +2.6 Increasing Faster 18 81.5 72.5 +9.0
Backlog of Orders 50.5 48.5 +2.0 Growing From Contracting 1 58.0 47.0 +11.0
New Export Orders 53.5 56.0 -2.5 Growing Slower 5 62.0 54.5 +7.5
Imports 53.5 51.0 +2.5 Growing Faster 6 55.0 50.5 +4.5
Inventory Sentiment 60.0 61.5 -1.5 Too High Slower 164 N/A N/A  
Customers' Inventories N/A N/A   N/A N/A N/A 45.5 40.0 +5.5

* 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.

Indexes reflect newly released seasonal adjustment factors.


COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY

Commodities Up in Price

Airfares (2); Carbon Pipe; Cleaning Products; Copper Products (2); Corn; Cotton (3); Cotton Products (5); #1 Diesel Fuel (4); #2 Diesel Fuel (7); Food and Beverage; Fuel (13); Fuel Surcharges; Gasoline (4); Ground Beef; Heating Fuel (2); Janitorial Supplies; Latex Gloves; Office Supplies; Paper (3); Petroleum Products; Plastic Film; Polyethylene Bags (2); Poly Products; Resin Products; Rubber Products; Soy Oil (2); Steel (2); Steel Pipe and Fittings; and Steel Products (2).

Commodities Down in Price

Chicken; and IT Equipment.

Commodities in Short Supply

Cotton; and Cotton Products.

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



JANUARY 2011 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In January, the NMI registered 59.4 percent, indicating continued growth in the non-manufacturing sector for the 14th 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
Jan 2011 59.4 Jul 2010 53.7
Dec 2010 57.1 Jun 2010 53.5
Nov 2010 56.0 May 2010 54.8
Oct 2010 54.6 Apr 2010 54.6
Sep 2010 53.9 Mar 2010 54.1
Aug 2010 52.8 Feb 2010 52.7
Average for 12 months – 54.8
High – 59.4
Low – 52.7

Business Activity

ISM's Non-Manufacturing Business Activity Index in January registered 64.6 percent, an increase of 1.7 percentage points when compared to the seasonally adjusted 62.9 percent registered in December. Ten industries reported increased business activity, and three industries reported decreased activity for the month of January. Five industries reported no change from December. Comments from respondents include: "New projects continue to develop and gain approval" and "New year capital budget funds available."

The industries reporting growth of business activity in January — listed in order — are: Real Estate, Rental & Leasing; Transportation & Warehousing; Utilities; Finance & Insurance; Wholesale Trade; Information; Management of Companies & Support Services; Retail Trade; Accommodation & Food Services; and Public Administration. The industries reporting decreased business activity in January are: Other Services; Arts, Entertainment & Recreation; and Health Care & Social Assistance.


Business Activity
%
Higher
%
Same
%
Lower

Index
Jan 2011 34 47 19 64.6
Dec 2010 36 50 14 62.9
Nov 2010 28 56 16 59.4
Oct 2010 30 57 13 58.5

New Orders

ISM's Non-Manufacturing New Orders Index grew in January for the 18th consecutive month. The index registered 64.9 percent, which is an increase of 3.5 percentage points from the seasonally adjusted 61.4 percent reported in December. Comments from respondents include: "Increase in customer activity" and "Clients feeling better about economy and beginning to release orders."

The 13 industries reporting growth of new orders in January — listed in order — are: Mining; Real Estate, Rental & Leasing; Utilities; Finance & Insurance; Construction; Transportation & Warehousing; Accommodation & Food Services; Information; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Wholesale Trade. The four industries reporting contraction of new orders in January are: Arts, Entertainment & Recreation; Other Services; Retail Trade; and Public Administration.


New Orders
%
Higher
%
Same
%
Lower

Index
Jan 2011 36 48 16 64.9
Dec 2010 34 52 14 61.4
Nov 2010 32 52 16 58.5
Oct 2010 25 63 12 56.6

Employment

Employment activity in the non-manufacturing sector grew in January, as ISM's Non-Manufacturing Employment Index registered 54.5 percent. This reflects an increase of 1.9 percentage points when compared to the 52.6 percent registered in December (seasonally adjusted). Six industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to December. Comments from respondents include: "Filling a few key vacancies" and "Increased project activity."

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


Employment
%
Higher
%
Same
%
Lower

Index
Jan 2011 16 64 20 54.5
Dec 2010 18 66 16 52.6
Nov 2010 16 73 11 53.6
Oct 2010 13 69 18 52.1

Supplier Deliveries

The Supplier Deliveries Index registered 53.5 percent in January, 2 percentage points higher than the 51.5 percent registered in December, indicating that supplier deliveries continued to slow in January. A reading above 50 percent indicates slower deliveries.

The eight industries reporting slower deliveries in January — listed in order — are: Mining; Retail Trade; Wholesale Trade; Construction; Other Services; Accommodation & Food Services; Finance & Insurance; and Public Administration. The two industries reporting faster supplier deliveries in January are: Agriculture, Forestry, Fishing & Hunting; and Transportation & Warehousing. Eight industries reported no change in supplier deliveries for the month of January.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Jan 2011 11 85 4 53.5
Dec 2010 8 87 5 51.5
Nov 2010 7 91 2 52.5
Oct 2010 8 86 6 51.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 49 percent in January, indicating that inventory levels contracted in January. Of the total respondents in January, 28 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Working down inventory in [preparation] for seasonally slow period" and "Holding tight control."

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


Inventories
%
Higher
%
Same
%
Lower

Index
Jan 2011 19 60 21 49.0
Dec 2010 17 71 12 52.5
Nov 2010 19 65 16 51.5
Oct 2010 16 63 21 47.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in January. ISM's Non-Manufacturing Prices Index for January registered 72.1 percent, 2.6 percentage points higher than the seasonally adjusted 69.5 percent reported in December. In January, the percentage of respondents reporting higher prices is 46 percent, the percentage indicating no change in prices paid is 50 percent, and 4 percent of the respondents reported lower prices.

In January, 17 industries reported an increase in prices paid, in the following order: Utilities; Accommodation & Food Services; Construction; Wholesale Trade; Management of Companies & Support Services; Mining; Real Estate, Rental & Leasing; Finance & Insurance; Educational Services; Arts, Entertainment & Recreation; Other Services; Retail Trade; Health Care & Social Assistance; Public Administration; Information; Transportation & Warehousing; and Professional, Scientific & Technical Services. The only industry reporting prices as decreasing for the month of January is Agriculture, Forestry, Fishing & Hunting.


Prices
%
Higher
%
Same
%
Lower

Index
Jan 2011 46 50 4 72.1
Dec 2010 35 60 5 69.5
Nov 2010 28 67 5 64.7
Oct 2010 32 65 3 66.4

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in January after one month of contraction. The index registered 50.5 percent, 2 percentage points higher than the 48.5 percent reported in December. Of the total respondents in January, 43 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in January — listed in order — are: Utilities; Mining; Information; Transportation & Warehousing; Finance & Insurance; Wholesale Trade; and Public Administration. The four industries reporting lower backlog of orders in January are: Retail Trade; Construction; Other Services; and Professional, Scientific & Technical Services.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Jan 2011 17 67 16 50.5
Dec 2010 15 67 18 48.5
Nov 2010 17 69 14 51.5
Oct 2010 16 72 12 52.0

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 at a slower rate in January. The New Export Orders Index for January registered 53.5 percent, which is 2.5 percentage points lower than the 56 percent registered in December. Of the total respondents in January, 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 January — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Information; Transportation & Warehousing; and Wholesale Trade. The four industries reporting a decrease in export orders in January are: Arts, Entertainment & Recreation; Other Services; Retail Trade; and Professional, Scientific & Technical Services. Four industries reported no change in new export orders for the month of January.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Jan 2011 23 61 16 53.5
Dec 2010 24 64 12 56.0
Nov 2010 24 71 5 59.5
Oct 2010 25 61 14 55.5

Imports

The ISM Non-Manufacturing Imports Index grew in January for the sixth consecutive month. The index registered 53.5 percent, which is 2.5 percentage points higher than the 51 percent reported in December. In January, 59 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 January are: Agriculture, Forestry, Fishing & Hunting; Information; Accommodation & Food Services; Wholesale Trade; and Transportation & Warehousing. The two industries reporting a decrease in imports for the month of January are: Arts, Entertainment & Recreation; and Retail Trade. Nine industries reported no change in imports for the month of January.


Imports
%
Higher
%
Same
%
Lower

Index
Jan 2011 17 73 10 53.5
Dec 2010 15 72 13 51.0
Nov 2010 16 77 7 54.5
Oct 2010 15 78 7 54.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in January registered 60 percent, which is 1.5 percentage points lower than the 61.5 percent reported in December. This indicates that respondents believe their inventories are too high at this time. In January, 26 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 68 percent said their inventories were about right.

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


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Jan 2011 26 68 6 60.0
Dec 2010 25 73 2 61.5
Nov 2010 27 66 7 60.0
Oct 2010 28 67 5 61.5

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 February 2011 data will be released at 10:00 a.m. (ET) on Thursday, March 3, 2011.



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