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March 2011 Non-Manufacturing ISM Report On Business®

FOR RELEASE: April 5, 2011


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


NMI at 57.3%

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 2011.


Business Activity Index at 59.7%
New Orders Index at 64.1%
Employment Index at 53.7%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in March for the 16th 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 registered 57.3 percent in March, 2.4 percentage points lower than the 59.7 percent registered in February, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 7.2 percentage points to 59.7 percent, reflecting growth for the 20th consecutive month, but at a slower rate than in February. The New Orders Index decreased 0.3 percentage point to 64.1 percent, and the Employment Index decreased 1.9 percentage points to 53.7 percent, indicating growth in employment for the seventh consecutive month, but at a slower rate. The Prices Index decreased 1.2 percentage points to 72.1 percent, indicating that prices increased at a slightly slower rate in March. According to the NMI, 16 non-manufacturing industries reported growth in March. Respondents' comments reflect concern about the recent natural disasters in Japan and the associated supply chain ramifications. Additionally, there is concern over rising costs, most notably for fuel and fuel products. Overall, most respondents remain confident about the direction of the economy."

INDUSTRY PERFORMANCE (Based on the NMI)

The 16 industries reporting growth in March based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Mining; Management of Companies & Support Services; Retail Trade; Arts, Entertainment & Recreation; Wholesale Trade; Accommodation & Food Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Information; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Utilities; Construction; Transportation & Warehousing; and Public Administration. The only industry reporting contraction in March is Educational Services.

WHAT RESPONDENTS ARE SAYING ...
  • "Business is steady. Very concerned about high fuel costs and the speed of any Japanese recovery." (Agriculture, Forestry, Fishing & Hunting)
  • "Housing market still slow getting started. Freight costs going higher. Prices moving up." (Wholesale Trade)
  • "Business activities remain about the same, but the increase in fuel costs has made both a direct and indirect impact." (Public Administration)
  • "Occupancy continues to increase compared to last year by about 3 percent." (Accommodation & Food Services)
  • "The catastrophe in Japan is severely affecting supply chains for magnetic media." (Management of Companies & Support Services)
  • "General state of business has improved slightly over the prior month. There seems to be an increase in qualified customers." (Construction)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
MARCH 2011
  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 57.3 59.7 -2.4 Growing Slower 16 61.2 61.4 -0.2
Business Activity/Production 59.7 66.9 -7.2 Growing Slower 20 69.0 66.3 +2.7
New Orders 64.1 64.4 -0.3 Growing Slower 20 63.3 68.0 -4.7
Employment 53.7 55.6 -1.9 Growing Slower 7 63.0 64.5 -1.5
Supplier Deliveries 51.5 52.0 -0.5 Slowing Slower 12 63.1 59.4 +3.7
Inventories 55.5 55.5 0.0 Growing Same 2 47.4 48.8 -1.4
Prices 72.1 73.3 -1.2 Increasing Slower 20 85.0 82.0 +3.0
Backlog of Orders 56.0 52.0 +4.0 Growing Faster 3 52.5 59.0 -6.5
New Export Orders 59.0 56.5 +2.5 Growing Faster 7 56.0 62.5 -6.5
Imports 50.0 53.5 -3.5 Unchanged From Growing 1 56.5 55.0 +1.5
Inventory Sentiment 67.0 57.5 +9.5 Too High Faster 166 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 39.5 40.0 -0.5

* 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

Airfares (4); Aluminum Based Products; Coffee (2); Copper (2); Copper Products (4); Copper Tubing; Corn; Cotton (5); Cotton Products (7); Dairy (2); #1 Diesel Fuel (6); #2 Diesel Fuel (9); Food and Beverage (3); Fuel (15); Fuel Products; Fuel Surcharges (3); Gasoline (6); Ground Beef; #2 Heating Fuel; Janitorial Supplies (3); Latex Gloves (3); Medical Supplies; Packaging Materials; Paper (5); Petroleum Products (3); Plastic Pipe; Plastic Products; Plastic Resins; Polyester (2); Polyester Garments; Polyethylene Bags (4); Roofing Shingles; Steel (4); Steel Products (4); Trucks (2); Truck Freight; and Valves.

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

Cotton (3); Electrical Components (2); Integrated Circuits; and Lettuce.

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



MARCH 2011 NON-MANUFACTURING INDEX SUMMARIES


NMI

In March, the NMI registered 57.3 percent, indicating continued growth in the non-manufacturing sector for the 16th 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 2011 57.3 Sep 2010 53.9
Feb 2011 59.7 Aug 2010 52.8
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
Average for 12 months – 55.6
High – 59.7
Low – 52.8

Business Activity

ISM's Non-Manufacturing Business Activity Index in March registered 59.7 percent, a decrease of 7.2 percentage points when compared to the 66.9 percent registered in February. Fifteen industries reported increased business activity, and two industries reported decreased activity for the month of March. One industry reported no change from February. Comments from respondents include: "Capital projects moved from inactive to active" and "Award of long-awaited contracts."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Mar 2011 37 52 11 59.7
Feb 2011 37 51 12 66.9
Jan 2011 34 47 19 64.6
Dec 2010 36 50 14 62.9

New Orders

ISM's Non-Manufacturing New Orders Index grew in March for the 20th consecutive month. The index registered 64.1 percent, which is a decrease of 0.3 percentage point from the 64.4 percent reported in February. Comments from respondents include: "Outlook for 2011 and expectations are materializing" and "The turnaround is here."

The 16 industries reporting growth of new orders in March — listed in order — are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Mining; Utilities; Arts, Entertainment & Recreation; Wholesale Trade; Professional, Scientific & Technical Services; Information; Accommodation & Food Services; Finance & Insurance; Health Care & Social Assistance; Retail Trade; Educational Services; Construction; Transportation & Warehousing; and Public Administration. The only industry reporting contraction of new orders in March is Other Services.


New Orders
%
Higher
%
Same
%
Lower

Index
Mar 2011 36 55 9 64.1
Feb 2011 31 61 8 64.4
Jan 2011 36 48 16 64.9
Dec 2010 34 52 14 61.4

Employment

Employment activity in the non-manufacturing sector grew in March, as ISM's Non-Manufacturing Employment Index registered 53.7 percent. This reflects a decrease of 1.9 percentage points when compared to the 55.6 percent registered in February. Eleven industries reported increased employment, three industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "Continue to refill vacancies" and "Still under hiring freeze."

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


Employment
%
Higher
%
Same
%
Lower

Index
Mar 2011 22 65 13 53.7
Feb 2011 20 68 12 55.6
Jan 2011 16 64 20 54.5
Dec 2010 18 66 16 52.6

Supplier Deliveries

The Supplier Deliveries Index registered 51.5 percent in March, 0.5 percentage point lower than the 52 percent registered in February, indicating that supplier deliveries continued to slow in March, but at a slightly slower rate. A reading above 50 percent indicates slower deliveries.

The five industries reporting slower deliveries in March are: Real Estate, Rental & Leasing; Wholesale Trade; Retail Trade; Other Services; and Professional, Scientific & Technical Services. The two industries reporting faster supplier deliveries in March are: Utilities; and Finance & Insurance. Eleven industries reported no change in supplier deliveries for the month of March compared to February.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Mar 2011 6 91 3 51.5
Feb 2011 9 86 5 52.0
Jan 2011 11 85 4 53.5
Dec 2010 8 87 5 51.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 55.5 percent in March, the same reading as reported in February. Of the total respondents in March, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Planned investment in line with increasing sales" and "Stockpiling Japanese products due to anticipated loss in capacity."

The nine industries reporting an increase in inventories in March — listed in order — are: Real Estate, Rental & Leasing; Utilities; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Finance & Insurance; Health Care & Social Assistance; and Retail Trade. The two industries reporting decreases in inventories in March are: Other Services and Public Administration.


Inventories
%
Higher
%
Same
%
Lower

Index
Mar 2011 20 71 9 55.5
Feb 2011 22 67 11 55.5
Jan 2011 19 60 21 49.0
Dec 2010 17 71 12 52.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in March. ISM's Non-Manufacturing Prices Index for March registered 72.1 percent, 1.2 percentage points lower than the 73.3 percent reported in February. In March, the percentage of respondents reporting higher prices is 51 percent, the percentage indicating no change in prices paid is 47 percent, and 2 percent of the respondents reported lower prices.

In March, all 18 industries reported an increase in prices paid, in the following order: Real Estate, Rental & Leasing; Construction; Accommodation & Food Services; Utilities; Arts, Entertainment & Recreation; Wholesale Trade; Mining; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Public Administration; Finance & Insurance; Other Services; Information; Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Transportation & Warehousing.


Prices
%
Higher
%
Same
%
Lower

Index
Mar 2011 51 47 2 72.1
Feb 2011 46 50 4 73.3
Jan 2011 46 50 4 72.1
Dec 2010 35 60 5 69.5

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in March for the third consecutive month. The index registered 56 percent, 4 percentage points higher than the 52 percent reported in February. Of the total respondents in March, 45 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in March — listed in order — are: Management of Companies & Support Services; Mining; Real Estate, Rental & Leasing; Construction; Retail Trade; Wholesale Trade; Finance & Insurance; and Professional, Scientific & Technical Services. The three industries reporting lower backlog of orders in March are: Utilities; Other Services; and Public Administration.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Mar 2011 20 72 8 56.0
Feb 2011 15 74 11 52.0
Jan 2011 17 67 16 50.5
Dec 2010 15 67 18 48.5

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 March. The New Export Orders Index for March registered 59 percent, which is 2.5 percentage points higher than the 56.5 percent registered in February. Of the total respondents in March, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The nine industries reporting an increase in new export orders in March — listed in order — are: Construction; Management of Companies & Support Services; Arts, Entertainment & Recreation; Mining; Transportation & Warehousing; Accommodation & Food Services; Retail Trade; Finance & Insurance; and Professional, Scientific & Technical Services. The only industry reporting a decrease in export orders in March is Other Services. Six industries reported no change in new export orders for the month of March compared to February.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Mar 2011 26 66 8 59.0
Feb 2011 20 73 7 56.5
Jan 2011 23 61 16 53.5
Dec 2010 24 64 12 56.0

Imports

The ISM Non-Manufacturing Imports Index registered 50 percent in March, indicating the rate is unchanged compared to February. Sixty-one percent of respondents reported that they do not use, or do not track, the use of imported materials.

The four industries reporting an increase in the use of imports in March are: Professional, Scientific & Technical Services; Management of Companies & Support Services; Accommodation & Food Services; and Other Services. The two industries reporting a decrease in imports for the month of March are: Educational Services and Wholesale Trade. Eleven industries reported no change in imports for the month of March compared to February.


Imports
%
Higher
%
Same
%
Lower

Index
Mar 2011 11 78 11 50.0
Feb 2011 19 69 12 53.5
Jan 2011 17 73 10 53.5
Dec 2010 15 72 13 51.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in March registered 67 percent, which is 9.5 percentage points higher than the 57.5 percent reported in February. This indicates that respondents believe their inventories are too high at this time. In March, 37 percent of respondents said their inventories were too high, 3 percent said their inventories were too low, and 60 percent said their inventories were about right.

The nine industries reporting a feeling that their inventories are too high in March — listed in order — are: Wholesale Trade; Professional, Scientific & Technical Services; Construction; Management of Companies & Support Services; Accommodation & Food Services; Utilities; Finance & Insurance; Arts, Entertainment & Recreation; and Public Administration. The two industries reporting that inventories are too low in March are: Other Services and Retail Trade.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Mar 2011 37 60 3 67.0
Feb 2011 23 69 8 57.5
Jan 2011 26 68 6 60.0
Dec 2010 25 73 2 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 (Non-Manufacturing Index) 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 2011 data will be released at 10:00 a.m. (ET) on Wednesday, May 4, 2011.



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