FOR RELEASE: May 4, 2005
|Contact:||Rose Marie Goupil|
|ISM, Media Relations|
|800/888-6276, Ext. 3015|
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 cover only their local vicinity. 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 April 2005.
(Tempe, Arizona) — Business activity in the non-manufacturing sector increased in April 2005, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
The report was issued today by Ralph G. Kauffman, Ph.D., C.P.M., chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee and coordinator of the Supply Chain Management Program, University of Houston-Downtown. "Non-manufacturing business activity increased for the 25th consecutive month in April," Kauffman said. He added, "Business activity increased at a slower rate in April, as did new orders. While both of these key indicators decreased compared to March, they are still both at relatively high levels historically. This indicates business in the non-manufacturing sector continues at a strong pace in April but at a lower rate of increase. While the Prices Index declined in April, comments from members indicate that pressure from their suppliers to increase prices continues unabated."
The 14 industries reporting growth in April — listed in order — are: Utilities; Insurance; Retail Trade; Public Administration; Communication; Mining; Real Estate; Wholesale Trade; Business Services; Health Services; Agriculture; Other Services*; Construction; and Finance & Banking. The two industries reporting activity the same as last month are: Transportation and Legal Services. The one industry reporting decreased activity from the prior month is Entertainment.
|ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE|
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
|Index||Series Index Apr||Series Index Mar||Percent Point Change||Direction||Rate of Change||Trend** (Months)||Series Index Apr||Series Index Mar||Percent Point Change|
|Business Activity / Production||61.7||63.1||-1.4||Increasing||Slower||25||56.7||56.5||+0.2|
|Supplier Deliveries||53.0||53.0||0.0||Slowing||At same rate||44||51.5||52.5||-1.0|
|Backlog of Orders||54.0||56.5||-2.5||Increasing||Slower||3||53.0||56.0||-3.0|
|New Export Orders||52.5||51.5||+1.0||Increasing||Faster||21||57.2||55.4||+1.8|
|Inventory Sentiment||60.5||64.5||-4.0||"Too High"||Lesser||95||N/A||N/A|
* 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 except for Backlog of Orders, Prices and Customers' Inventories.
** Number of months moving in current direction.
Air Fares; Aluminum (16); Asphalt/Asphalt Products (2); Beef* (5); Cement/Concrete; Coffee (2); Copper (20); Copper Cable and Wire (2); #1 Diesel Fuel (2); #2 Diesel Fuel (4); Electric Transmission Products/Utility Hardware; Electronic Components & Equipment; Energy; Fertilizer/Components; Food & Beverage Products; Fuel (17); Fuel Surcharges; Gas & Fuel Oil; Gasoline (17); Hotel Rates (5); Janitorial Supplies; Lumber and Lumber Products including Pine and Treated (4); Medical Devices/Equipment; Medical/Surgical Supplies; Metals (3); Natural Gas (8); Oil; Packaging Supplies/Materials* (2); Paper/Paper Products (15); Petroleum; Petroleum-Based Products (3); Petroleum-Related Products; Plastic Items/Products (4); Plastics* (16); Polyester/Films (2); Printing Paper; PVC (4); Roofing Products including Felt, Shingles and Insulation (6); Steel (18); Steel Products* (14); Transportation/Freight Charges (12); and Unleaded Gasoline (3).
Beef*; Cardboard/Corrugated Boxes; Computer Hardware (PCs and related products) (7); Consulting Fees/Services; LCD PC Monitors/Projectors; Office Equipment/Furniture; Office Supplies; Packaging Supplies/Materials*; Plastics*; Print Services; Printed Materials; Printer Toners; and Steel Products*.
Conveyor Belt/Products and Steel (15).
Note: The number of consecutive months the commodity is listed is indicated after each item.
* Indicates commodity is reported both up and down in price.
ISM's Non-Manufacturing Business Activity Index in April decreased to 61.7 percent from March's 63.1 percent, indicating a slower rate of growth of activity in April. This month, 14 sectors report increased business activity, one is reporting decreased activity, and two indicate unchanged activity compared to March.
The industries reporting the highest rates of growth of business activity in April are: Utilities; Insurance; Retail Trade; Public Administration; and Communication. The one industry reporting contraction of business activity in April is Entertainment.
|Average for 12 months – 61.4|
High – 63.9
Low – 58.7
ISM's Non-Manufacturing New Orders Index decreased to 58.8 percent in April from 62.1 percent in March. This indicates continued expansion of new orders but at a slower rate of growth than in March. Comments from members include: "Higher demand for business services (internal and external)"; "Increase of capital assets purchasing"; "Increase in activity from advertising and promotions"; and "Industrial, commercial and residential growth continues."
Industries reporting the highest rates of growth of new orders in April are: Utilities; Insurance; Health Services; Communication; and Retail Trade. The one industry reporting contraction of new orders in April is Entertainment.
Employment activity in the non-manufacturing sector increased at a slower rate in April compared to March. This was the 19th consecutive monthly increase in non-manufacturing employment. ISM's Non-Manufacturing Employment Index for April is 53.3 percent, a decline of 3.8 percentage points from March's 57.1 percent. Ten industries are reporting increased employment, two report a decrease, and five indicate employment is unchanged from March. Comments from respondents include: "We are not using as many temporary workers as we have been"; "Business is up"; "Growth in outpatient activity warranted increases in staffing"; "Increased sales — hired people to help with workload"; and "Steady increase in business."
The industries reporting the highest rates of growth in employment in April are: Mining; Insurance; Retail Trade; Health Services; and Wholesale Trade. The industries reporting reductions in employment in April are: Entertainment and Communication.
The delivery performance of suppliers to non-manufacturing organizations was slower for the 44th consecutive month in April. The index registered 53 percent, the same as in March. A reading above 50 percent indicates slower deliveries. Comments from purchasing and supply executives concerning supplier deliveries in April include: "Transportation shortage"; "Greater backlogs at factories stretching leadtimes"; "Most manufacturers are on allocation due to material shortage"; and "Cut back during slow times and did not ramp up in time to cover increasing demand — steel shortages have increased leadtime on special orders."
The industries reporting the highest rates of slowing in supplier deliveries in April are: Legal Services; Utilities; Mining; Communication; and Construction. Industries reporting faster supplier deliveries in April are: Business Services and Other Services*.
NOTE: A list of commodities in short supply is available on page 3 of this report.
ISM's Non-Manufacturing Inventories Index registered 54.5 percent in April, 2 percentage points higher than the 52.5 percent reported in March. This is the third consecutive month of higher inventories after a dip in inventory size in January. Of the total respondents in April, 30 percent indicate they do not have inventories or do not measure them. Comments from members include: "Business is up which requires more inventory"; "Monthly stock levels higher to adjust for more business"; "We are trying to reduce our inventory"; and "Higher activity has required us to increase our inventory."
The industries reporting the highest rates of inventory increases in April are: Communication; Other Services*; Public Administration; Wholesale Trade; and Finance & Banking. The industries reporting inventory decreases in April are: Legal Services; Entertainment; Agriculture; and Utilities.
Prices paid by non-manufacturing organizations for purchased materials and services increased in April for the 23rd consecutive month but at a slower rate of increase than in March. ISM's Non-Manufacturing Prices Index for April is 61.9 percent, down 3.7 percentage points from the 65.6 percent registered for March. In April, the percentage of members reporting higher prices dropped to 41 percent from 43 percent in March, the proportion indicating no change rose 1 percentage point to 57 percent, and the number noting lower prices increased 1 percentage point to 2 percent.
The industries reporting the highest rates of increase in prices paid in April are: Agriculture; Public Administration; Insurance; Construction; and Utilities. No industry is reporting price decreases in April.
NOTE: A list of commodities reported up in price and down in price is available on page 2 of this report.
ISM's Non-Manufacturing Backlog of Orders Index registered 54 percent in April. This is a decrease of 2.5 percentage points from the 56.5 percent reported for March. April's increase in order backlogs marks 23 out of the last 24 months that an increase has been reported in order backlogs. Of the total respondents in April, 44 percent indicated they do not measure backlog of orders. Purchasing and supply executives' comments on backlogs of orders include: "Completing current projects for clients — incoming projects are of smaller volume"; "Sales department closing more sales"; "Plants are full"; and "Inventory balancing."
The industries reporting the highest rates of increase in order backlogs in April are: Construction; Mining; Utilities; Communication; and Finance & Banking. The industries reporting a decrease in backlog of orders in April are: Legal Services; Wholesale Trade; and Public Administration.
Orders and requests for services and other non-manufacturing activities to be provided outside of the United States by domestically based personnel increased for the 21st consecutive month in April. The New Export Orders Index for April is 52.5 percent compared to March's 51.5 percent, indicating a faster rate of growth in April compared to March. Of the total respondents in April, 77 percent indicated they either do not perform, or do not separately measure, orders for work outside the United States.
The industries reporting increases in new export orders in April are: Finance & Banking; Communication; Other Services*; Wholesale Trade; and Retail Trade. The industries reporting decreases in new export orders in April are: Public Administration; Mining; and Business Services.
In April, the ISM Imports Index registered 58.5 percent, 0.5 percentage point lower than the 59 percent reported in March. This indicates that use of imported materials by non-manufacturing industries increased at a slower rate in April than in March. April's index marks the 24th consecutive month of import growth. In April, 69 percent of respondents reported that they do not use or do not track the use of imported materials.
The industries reporting the highest rates of increase in the use of imports in April are: Construction; Communication; Mining; Utilities; and Retail Trade. The industries reporting decreases in the use of imports in April are: Entertainment and Agriculture.
The ISM Non-Manufacturing Inventory Sentiment Index in April registered 60.5 percent, 4 percentage points lower than the 64.5 percent reported in March. This indicates that non-manufacturing purchasing and supply executives feel a lesser degree of discomfort with current levels of inventory in April than they did during March, February and January. In April, 28 percent of respondents felt their inventories were too high, 7 percent indicated their inventories were too low, and 65 percent said that their inventories were about right.
The industries reporting the highest rates of feeling that their inventories are too high in April are: Wholesale Trade; Communication; Legal Services; Health Services; Agriculture; and Finance & Banking. The industries reporting that their inventories are too low in April are: Mining; Utilities; and Public Administration.
|%Too High||%About Right||%Too Low||Index|
*Other Services include:
Hotels, Rooming Houses, Camps, and Other Lodging Places; Personal Services; Automotive Repair, Services, and Parking; Miscellaneous Repair Services; Educational Services; Social Services; Museums, Art Galleries, and Botanical and Zoological Gardens; Membership Organizations; Engineering, Accounting, Research, Management, and Related Services; and Miscellaneous Services.
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.
The Non-Manufacturing ISM Report On Business® is based on data compiled from monthly replies to questions asked of more than 370 purchasing and supply executives in over 62 different industries representing nine divisions from the Standard Industrial Classification (SIC) categories. Membership of the Business Survey Committee is diversified by SIC category and is based on each industry's contribution to gross domestic product (GDP).
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, the net difference between the number of responses in the positive economic direction (higher and slower for Supplier Deliveries) and the negative economic direction (lower and faster for Supplier Deliveries). Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. The remaining indexes have not indicated significant seasonality.
A weighted composite index similar to the PMI that is so popular in the Manufacturing ISM Report On Business® is not available. Several years of data will need to be developed before that type of non-manufacturing indicator can be developed. 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 May 2005 data will be released at 10:00 a.m. (ET) on June 3, 2005.