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November 2011 Non-Manufacturing ISM Report On Business®

FOR RELEASE: December 5, 2011


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


NMI at 52%

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 2011.


Business Activity Index at 56.2%
New Orders Index at 53%
Employment Index at 48.9%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in November for the 24th 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 percent in November, 0.9 percentage point lower than the 52.9 percent registered in October, and indicating continued growth at a slightly slower rate in the non-manufacturing sector. This is the lowest reading since January 2010, when the index registered 50.7 percent. The Non-Manufacturing Business Activity Index increased 2.4 percentage points to 56.2 percent, reflecting growth for the 28th consecutive month. The New Orders Index increased by 0.6 percentage point to 53 percent. The Employment Index decreased 4.4 percentage points to 48.9 percent, indicating contraction in employment after one month of growth. The Prices Index increased 5.4 percentage points to 62.5 percent, indicating prices increased at a faster rate in November when compared to October. According to the NMI, 12 non-manufacturing industries reported growth in November. Respondents' comments for the most part project continued slow, incremental growth. There still remains a strong concern about lagging employment."

INDUSTRY PERFORMANCE (Based on the NMI)

The 12 non-manufacturing industries reporting growth in November based on the NMI composite index — listed in order — are: Retail Trade; Mining; Information; Utilities; Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Public Administration; Professional, Scientific & Technical Services; Wholesale Trade; Transportation & Warehousing; and Health Care & Social Assistance. The six industries reporting contraction in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Educational Services; Other Services; Finance & Insurance; and Construction.

WHAT RESPONDENTS ARE SAYING...
  • "Business activity continues to swing back and forth. Customer traffic remains lower than expected, but discretionary spending is fluctuating, making it difficult to find the pulse of the consumer." (Arts, Entertainment & Recreation)
  • "Lending is getting a little better. Competition for good deals is fierce because there remains a very limited number of high-quality borrowers." (Finance & Insurance)
  • "Raw materials prices appear to be stabilizing, and in some cases are dropping. Diesel fuels remain elevated and have not dropped." (Mining)
  • "We currently see no signs of a turnaround. Customers are nervous about the future of their jobs and incomes. Due to this fact, our sales are down and our need to hire more employees is, too." (Accommodation & Food Services)
  • "Business is slowly improving. Outlook for the next few months is good." (Retail Trade)
  • "In the face of an extremely tight business climate, prices continue to be sticky. We are not seeing significant price moderation." (Management of Companies & Support Services)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
NOVEMBER 2011
  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 52.0 52.9 -0.9 Growing Slower 24 52.7 50.8 +1.9
Business Activity/Production 56.2 53.8 +2.4 Growing Faster 28 56.6 50.1 +6.5
New Orders 53.0 52.4 +0.6 Growing Faster 28 56.7 52.4 +4.3
Employment 48.9 53.3 -4.4 Contracting From Growing 1 51.8 53.5 -1.7
Supplier Deliveries 50.0 52.0 -2.0 Unchanged From Slowing 1 49.9 51.3 -1.4
Inventories 52.5 45.5 +7.0 Growing From Contracting 1 48.3 46.7 +1.6
Prices 62.5 57.1 +5.4 Increasing Faster 28 45.0 41.0 +4.0
Backlog of Orders 48.0 47.0 +1.0 Contracting Slower 2 45.0 47.5 -2.5
New Export Orders 55.5 54.0 +1.5 Growing Faster 4 52.0 50.0 +2.0
Imports 48.5 48.0 +0.5 Contracting Slower 3 49.0 49.5 -0.5
Inventory Sentiment 63.0 57.5 +5.5 Too High Faster 174 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 50.0 43.5 +6.5

* 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 (2); Crab Legs; Diesel Fuel; #2 Diesel Fuel; Fluorescent Lamps (2); Food Products; Fruit; Fuel*; Gasoline; Gloves; Hard Drives; Heating Fuel; Natural Gas; Packaging Film; Paper; Paper Products (3); Steel Products* (3); and Vegetables.

Commodities Down in Price

Computers; Fuel*; and Steel Products*.

Commodities in Short Supply

Hard Drives 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.



NOVEMBER 2011 NON-MANUFACTURING INDEX SUMMARIES


NMI

In November, the NMI registered 52 percent, indicating continued growth in the non-manufacturing sector for the 24th 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 2011 52.0 May 2011 54.6
Oct 2011 52.9 Apr 2011 52.8
Sep 2011 53.0 Mar 2011 57.3
Aug 2011 53.3 Feb 2011 59.7
Jul 2011 52.7 Jan 2011 59.4
Jun 2011 53.3 Dec 2010 57.1
Average for 12 months – 54.8
High – 59.7
Low – 52.0
Business Activity

ISM's Non-Manufacturing Business Activity Index in November registered 56.2 percent, an increase of 2.4 percentage points when compared to the 53.8 percent registered in October. Nine industries reported increased business activity, and eight industries reported decreased activity for the month of November. Comments from respondents include: "Clients deciding to act and not wait any longer" and "Trying to finish projects prior to end of year."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Nov 2011 26 55 19 56.2
Oct 2011 24 57 19 53.8
Sep 2011 27 59 14 57.1
Aug 2011 27 54 19 55.6

New Orders

ISM's Non-Manufacturing New Orders Index grew in November for the 28th consecutive month. The index registered 53 percent, an increase of 0.6 percentage point from the 52.4 percent reported in October. Comments from respondents include: "New customers and products" and "Building inventories for favorable sales outlook."

The 10 industries reporting growth of new orders in November — listed in order — are: Retail Trade; Real Estate, Rental & Leasing; Information; Arts, Entertainment & Recreation; Mining; Wholesale Trade; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Public Administration. The six industries reporting contraction of new orders in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Educational Services; Construction; Transportation & Warehousing; and Finance & Insurance.


New Orders
%
Higher
%
Same
%
Lower

Index
Nov 2011 23 61 16 53.0
Oct 2011 23 57 20 52.4
Sep 2011 25 60 15 56.5
Aug 2011 27 50 23 52.8

Employment

Employment activity in the non-manufacturing sector contracted in November after one month of growth, as ISM's Non-Manufacturing Employment Index registered 48.9 percent. This reflects a decrease of 4.4 percentage points when compared to the 53.3 percent registered in October. Five industries reported increased employment, eight industries reported decreased employment, and five industries reported unchanged employment compared to October. Comments from respondents include: "Reduction in staff in areas where activity is consistently slow" and "Minor cost reduction effort to ensure year-end targets."

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


Employment
%
Higher
%
Same
%
Lower

Index
Nov 2011 15 68 17 48.9
Oct 2011 16 64 20 53.3
Sep 2011 10 73 17 48.7
Aug 2011 16 69 15 51.6

Supplier Deliveries

The Supplier Deliveries Index registered 50 percent in November, 2 percentage points lower than the 52 percent registered in October, indicating that supplier deliveries were unchanged in November. A reading above 50 percent indicates slower deliveries.

The five industries reporting slower deliveries in November are: Transportation & Warehousing; Other Services; Accommodation & Food Services; Public Administration; and Utilities. The four industries reporting faster supplier deliveries in November are: Agriculture, Forestry, Fishing & Hunting; Information; Wholesale Trade; and Finance & Insurance. Nine industries reported no change in supplier deliveries in November compared to October.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Nov 2011 4 92 4 50.0
Oct 2011 7 90 3 52.0
Sep 2011 6 87 7 49.5
Aug 2011 10 86 4 53.0

Inventories

ISM's Non-Manufacturing Inventories Index grew in November after one month of contraction. The index registered 52.5 percent, which is 7 percentage points higher than the 45.5 percent reading that was reported in October. Of the total respondents in November, 24 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "More orders, so higher raw materials inventories" and "Finally, inventories are in line with run rates."

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


Inventories
%
Higher
%
Same
%
Lower

Index
Nov 2011 20 65 15 52.5
Oct 2011 14 63 23 45.5
Sep 2011 19 65 16 51.5
Aug 2011 21 65 14 53.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased at a faster rate in November. ISM's Non-Manufacturing Prices Index for November registered 62.5 percent, 5.4 percentage points higher than the 57.1 percent reported in October. In November, the percentage of respondents reporting higher prices is 23 percent, the percentage indicating no change in prices paid is 72 percent, and 5 percent of the respondents reported lower prices.

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


Prices
%
Higher
%
Same
%
Lower

Index
Nov 2011 23 72 5 62.5
Oct 2011 21 68 11 57.1
Sep 2011 24 69 7 61.9
Aug 2011 28 64 8 64.2

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in November for the fifth time in six months. The index registered 48 percent, 1 percentage point higher than the 47 percent reported in October. Of the total respondents in November, 37 percent indicated they do not measure backlog of orders.

The two industries reporting an increase in order backlogs in November are: Other Services; and Accommodation & Food Services. The seven industries reporting lower backlog of orders in November — listed in order — are: Construction; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Wholesale Trade; Public Administration; and Management of Companies & Support Services. Nine industries reported no change in order backlogs for the month of November compared to October.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Nov 2011 13 70 17 48.0
Oct 2011 10 74 16 47.0
Sep 2011 13 79 8 52.5
Aug 2011 14 67 19 47.5

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 in November for the fourth consecutive month. The New Export Orders Index for November registered 55.5 percent, which is 1.5 percentage points higher than the 54 percent reported in October. Of the total respondents in November, 65 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: Mining; Accommodation & Food Services; Construction; Public Administration; Finance & Insurance; and Wholesale Trade. The two industries reporting a decrease in export orders in November are: Educational Services; and Professional, Scientific & Technical Services. Eight industries reported no change in new export orders in November compared to October.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Nov 2011 18 75 7 55.5
Oct 2011 21 66 13 54.0
Sep 2011 15 74 11 52.0
Aug 2011 20 73 7 56.5

Imports

The ISM Non-Manufacturing Imports Index contracted in November for the third consecutive month. The index registered 48.5 percent, which is 0.5 percentage point higher than the 48 percent reported in October. Fifty-five 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 November are: Finance & Insurance; Transportation & Warehousing; Information; and Construction. The five industries reporting a decrease in imports for the month of November are: Educational Services; Other Services; Arts, Entertainment & Recreation; Accommodation & Food Services; and Wholesale Trade. Nine industries reported no change in imports for the month of November compared to October.


Imports
%
Higher
%
Same
%
Lower

Index
Nov 2011 12 73 15 48.5
Oct 2011 10 76 14 48.0
Sep 2011 8 79 13 47.5
Aug 2011 13 81 6 53.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in November registered 63 percent, which is 5.5 percentage points higher than the 57.5 percent reported in October. This indicates that respondents believe their inventories are still too high at this time. In November, 31 percent of respondents said their inventories were too high, 5 percent said their inventories were too low, and 64 percent said their inventories were about right.

The nine industries reporting a feeling that their inventories are too high in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Wholesale Trade; Other Services; Finance & Insurance; Utilities; Mining; Information; and Health Care & Social Assistance. The two industries reporting that their inventories are too low in November are: Accommodation & Food Services; and Construction. Six industries reported no change in inventory sentiment in November compared to October.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Nov 2011 31 64 5 63.0
Oct 2011 20 75 5 57.5
Sep 2011 21 76 3 59.0
Aug 2011 23 66 11 56.0

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 (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® surveys are sent out to Non-Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM then compiles the reports for release on the third business day of the following month.

The industries reporting growth, as indicated in the Non-Manufacturing ISM Report On Business® monthly reports, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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 2011 data will be released at 10:00 a.m. (ET) on Thursday, January 5, 2012.



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