July 2011 Non-Manufacturing ISM Report On Business®

FOR RELEASE: August 3, 2011


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


NMI at 52.7%

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 July 2011.


Business Activity Index at 56.1%
New Orders Index at 51.7%
Employment Index at 52.5%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in July for the 20th 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 52.7 percent in July, 0.6 percentage point lower than the 53.3 percent registered in June, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 2.7 percentage points to 56.1 percent, reflecting growth for the 24th consecutive month and at a faster rate than in June. The New Orders Index decreased by 1.9 percentage points to 51.7 percent. The Employment Index decreased 1.6 percentage points to 52.5 percent, indicating growth in employment for the 11th consecutive month, but at a slower rate than in June. The Prices Index decreased 4.3 percentage points to 56.6 percent, indicating that prices increased at a slower rate in July when compared to June. According to the NMI, 13 non-manufacturing industries reported growth in July. Respondents' comments remain mixed; however, for the most part they indicate that business conditions are flattening out."

INDUSTRY PERFORMANCE (Based on the NMI)

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

WHAT RESPONDENTS ARE SAYING...
  • "Sales and customer traffic recovered slightly, pulling even with last year after trending lower for several months. Discretionary spending per customer has continued to decline in all areas of the operation." (Arts, Entertainment & Recreation)
  • "Sales volumes are steady. Input costs are increasing." (Agriculture, Forestry, Fishing & Hunting)
  • "Business outlook remains steady, but concerns about the second half of the year remain." (Professional, Scientific & Technical Services)
  • "Municipal government has not bounced back at a similar pace to the private sector." (Public Administration)
  • "New home construction is still very slow. Repair and remodel is the only bright spot." (Wholesale Trade)
  • "Commodities cooling off and dropping a bit." (Retail Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JULY 2011
  Non-Manufacturing Manufacturing
Index Series
Index
Jul
Series
Index
Jun
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Jul
Series
Index
Jun
Percent
Point
Change
NMI/PMI 52.7 53.3 -0.6 Growing Slower 20 50.9 55.3 -4.4
Business Activity/Production 56.1 53.4 +2.7 Growing Faster 24 52.3 54.5 -2.2
New Orders 51.7 53.6 -1.9 Growing Slower 24 49.2 51.6 -2.4
Employment 52.5 54.1 -1.6 Growing Slower 11 53.5 59.9 -6.4
Supplier Deliveries 50.5 52.0 -1.5 Slowing Slower 16 50.4 56.3 -5.9
Inventories 56.5 53.5 +3.0 Growing Faster 6 49.3 54.1 -4.8
Prices 56.6 60.9 -4.3 Increasing Slower 24 59.0 68.0 -9.0
Backlog of Orders 44.0 48.5 -4.5 Contracting Faster 2 45.0 49.0 -4.0
New Export Orders 49.0 57.0 -8.0 Contracting From Growing 1 54.0 53.5 +0.5
Imports 47.5 46.5 +1.0 Contracting Slower 2 53.5 51.0 +2.5
Inventory Sentiment 59.5 58.5 +1.0 Too High Faster 170 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 44.0 47.0 -3.0

* 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

Airfares (8); Asphalt Products; Beef; Can Liners (4); Cardboard; Cheese (2); Construction Labor; Copy Paper (2); Cotton Products (11); Dairy; #2 Diesel Fuel (13); Fuel (19); Gasoline* (10); Janitorial Maintenance Supplies; Lumber; Maintenance Contracts; Office and Computer Supplies; Packaging; Paper (9); Paper Products; Petroleum Products (7); Plastic Bags; Plastic Products (5); and Roofing Shingles.

Commodities Down in Price

Chicken; Computers and Computer Supplies; Diesel Fuel; Gasoline* (2); and Natural Gas.

Commodities in Short Supply

Trucks is the only commodity reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.



JULY 2011 NON-MANUFACTURING INDEX SUMMARIES


NMI

In July, the NMI registered 52.7 percent, indicating continued growth in the non-manufacturing sector for the 20th consecutive month. This month's index is the lowest reading since January 2010, when the index registered 50.7 percent. 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
Jul 2011 52.7 Jan 2011 59.4
Jun 2011 53.3 Dec 2010 57.1
May 2011 54.6 Nov 2010 56.0
Apr 2011 52.8 Oct 2010 54.6
Mar 2011 57.3 Sep 2010 53.9
Feb 2011 59.7 Aug 2010 52.8
Average for 12 months – 55.4
High – 59.7
Low – 52.7

Business Activity

ISM's Non-Manufacturing Business Activity Index in July registered 56.1 percent, an increase of 2.7 percentage points when compared to the 53.4 percent registered in June. Twelve industries reported increased business activity, and five industries reported decreased activity for the month of July. Comments from respondents include: "Slightly higher due to increased marketing efforts" and "Increased sales — existing businesses."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Jul 2011 30 50 20 56.1
Jun 2011 33 50 17 53.4
May 2011 29 57 14 53.6
Apr 2011 34 54 12 53.7

New Orders

ISM's Non-Manufacturing New Orders Index grew in July for the 24th consecutive month. The index registered 51.7 percent, a decrease of 1.9 percentage points from the 53.6 percent reported in June. Comments from respondents include: "Lower demand or budget constraints" and "Uncertainty of funding."

The 10 industries reporting growth of new orders in July — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Mining; Arts, Entertainment & Recreation; Retail Trade; Educational Services; Public Administration; Accommodation & Food Services; Construction; and Finance & Insurance. The four industries reporting contraction of new orders in July are: Professional, Scientific & Technical Services; Health Care & Social Assistance; Utilities; and Management of Companies & Support Services.


New Orders
%
Higher
%
Same
%
Lower

Index
Jul 2011 24 55 21 51.7
Jun 2011 28 56 16 53.6
May 2011 32 54 14 56.8
Apr 2011 34 52 14 52.7

Employment

Employment activity in the non-manufacturing sector grew in July, as ISM's Non-Manufacturing Employment Index registered 52.5 percent. This reflects a decrease of 1.6 percentage points when compared to the 54.1 percent registered in June. Nine industries reported increased employment, one industry reported decreased employment, and eight industries reported unchanged employment compared to June. Comments from respondents include "Filling some vacancies on a case-by-case basis" and "Slightly lower due to end of assignments/jobs."

The industries reporting an increase in employment in July — listed in order — are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Retail Trade; Finance & Insurance; Public Administration; and Accommodation & Food Services. The only industry reporting a reduction in employment in July is Professional, Scientific & Technical Services.


Employment
%
Higher
%
Same
%
Lower

Index
Jul 2011 27 58 15 52.5
Jun 2011 27 61 12 54.1
May 2011 28 63 9 54.0
Apr 2011 26 63 11 51.9

Supplier Deliveries

The Supplier Deliveries Index registered 50.5 percent in July, 1.5 percentage points lower than the 52 percent registered in June, indicating that supplier deliveries continued to slow in July. A reading above 50 percent indicates slower deliveries.

The nine industries reporting slower deliveries in July — listed in order — are: Utilities; Arts, Entertainment & Recreation; Other Services; Transportation & Warehousing; Information; Accommodation & Food Services; Public Administration; Construction; and Retail Trade. The four industries reporting faster supplier deliveries in July are: Wholesale Trade; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Finance & Insurance.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Jul 2011 7 87 6 50.5
Jun 2011 9 86 5 52.0
May 2011 14 80 6 54.0
Apr 2011 10 86 4 53.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 56.5 percent in July, 3 percentage points higher than the 53.5 percent reading that was reported in June. Of the total respondents in July, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Improved inventory management oversight" and "Continue to fill in gaps and increase in line with run rates."

The seven industries reporting an increase in inventories in July — listed in order — are: Mining; Utilities; Transportation & Warehousing; Information; Wholesale Trade; Accommodation & Food Services; and Public Administration. The five industries reporting decreases in inventories in July are: Management of Companies & Support Services; Construction; Finance & Insurance; Health Care & Social Assistance; and Retail Trade.


Inventories
%
Higher
%
Same
%
Lower

Index
Jul 2011 24 65 11 56.5
Jun 2011 23 61 16 53.5
May 2011 26 58 16 55.0
Apr 2011 20 71 9 55.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in July. ISM's Non-Manufacturing Prices Index for July registered 56.6 percent, 4.3 percentage points lower than the 60.9 percent reported in June. In July, the percentage of respondents reporting higher prices is 30 percent, the percentage indicating no change in prices paid is 61 percent, and 9 percent of the respondents reported lower prices.

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


Prices
%
Higher
%
Same
%
Lower

Index
Jul 2011 30 61 9 56.6
Jun 2011 35 58 7 60.9
May 2011 53 42 5 69.6
Apr 2011 57 41 2 70.1

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in July for the second consecutive month. The index registered 44 percent, 4.5 percentage points lower than the 48.5 percent reported in June. Of the total respondents in July, 45 percent indicated they do not measure backlog of orders.

The two industries reporting an increase in order backlogs in July are: Accommodation & Food Services; and Mining. The seven industries reporting lower backlog of orders in July — listed in order — are: Utilities; Public Administration; Other Services; Information; Retail Trade; Professional, Scientific & Technical Services; and Wholesale Trade. Eight industries reported no change in order backlogs for the month of July compared to June.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Jul 2011 6 76 18 44.0
Jun 2011 12 73 15 48.5
May 2011 18 74 8 55.0
Apr 2011 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 contracted in July after 10 consecutive months of growth. The New Export Orders Index for July registered 49 percent, which is 8 percentage points lower than the 57 percent reported in June. Of the total respondents in July, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The four industries reporting an increase in new export orders in July are: Construction; Transportation & Warehousing; Public Administration; and Accommodation & Food Services. The five industries reporting a decrease in export orders in July are: Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Other Services; Professional, Scientific & Technical Services; and Information. Six industries reported no change in new export orders for the month of July compared to June.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Jul 2011 17 64 19 49.0
Jun 2011 20 74 6 57.0
May 2011 20 74 6 57.0
Apr 2011 20 67 13 53.5

Imports

The ISM Non-Manufacturing Imports Index contracted in July for the second consecutive month after 10 consecutive months of growth. The index registered 47.5 percent, which is 1 percentage point higher than the 46.5 percent reported in June. Fifty-nine 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 July are: Transportation & Warehousing; Information; Retail Trade; Mining; and Accommodation & Food Services. The six industries reporting a decrease in imports for the month of July — listed in order — are: Other Services; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Management of Companies & Support Services; and Arts, Entertainment & Recreation. Five industries reported no change in imports for the month of July compared to June.


Imports
%
Higher
%
Same
%
Lower

Index
Jul 2011 14 67 19 47.5
Jun 2011 6 81 13 46.5
May 2011 11 79 10 50.5
Apr 2011 19 76 5 57.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in July registered 59.5 percent, which is 1 percentage point higher than the 58.5 percent reported in June. This indicates that respondents believe their inventories are still too high at this time. In July, 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 seven industries reporting a feeling that their inventories are too high in July — listed in order — are: Other Services; Management of Companies & Support Services; Finance & Insurance; Arts, Entertainment & Recreation; Accommodation & Food Services; Wholesale Trade; and Information. The two industries reporting that inventories are too low in July are: Professional, Scientific & Technical Services; and Real Estate, Rental & Leasing. Eight industries reported no change in inventory sentiment in July compared to June.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Jul 2011 27 65 8 59.5
Jun 2011 24 69 7 58.5
May 2011 23 64 13 55.0
Apr 2011 21 73 6 57.5

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 August 2011 data will be released at 10:00 a.m. (ET) on Tuesday September 6, 2011.



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