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November 2009 Non-Manufacturing ISM Report On Business®

FOR RELEASE: December 3, 2009


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


NMI (Non-Manufacturing Index) at 48.7%

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 November 2009.


Business Activity Index at 49.6%
New Orders Index at 55.1%
Employment Index at 41.6%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector contracted in November after two consecutive months of expansion, 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; and senior vice president — supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 48.7 percent in November, 1.9 percentage points lower than the 50.6 percent registered in October, indicating contraction in the non-manufacturing sector after two consecutive months of expansion. The Non-Manufacturing Business Activity Index decreased 5.6 percentage points to 49.6 percent, reflecting contraction after three consecutive months of growth. The New Orders Index decreased 0.5 percentage point to 55.1 percent, and the Employment Index increased 0.5 percentage point to 41.6 percent. The Prices Index increased 4.8 percentage points to 57.8 percent in November, indicating an increase in prices paid from October. According to the NMI, six non-manufacturing industries reported growth in November. Respondents' comments remain cautious about business conditions and reflect concern over the length of time for economic recovery."

INDUSTRY PERFORMANCE (Based on the NMI)

The six industries reporting growth in November based on the NMI composite index — listed in order — are: Other Services; Health Care & Social Assistance; Construction; Finance & Insurance; Retail Trade; and Information. The 11 industries reporting contraction in November — listed in order — are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Mining; Arts, Entertainment & Recreation; Public Administration; Accommodation & Food Services; Educational Services; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; and Utilities.

WHAT RESPONDENTS ARE SAYING ...
  • "Capital markets remain very tight; lenders are not releasing funds for development projects, limiting expansion." (Accommodation & Food Services)
  • "Fourth quarter still looking grim, but potential upturn for Q1 2010." (Professional, Scientific & Technical Services)
  • "No one trusts that the recovery is real. Seems everything and everyone is in a holding pattern." (Public Administration)
  • "Business is still flat." (Wholesale Trade)
  • "U.S. business remains better than 2007 levels, although it's been through personnel and cost reductions that we are now profitable. Business continues to be about 8 percent below 2008 levels." (Real Estate, Rental & Leasing)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
NOVEMBER 2009
  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 48.7 50.6 -1.9 Contracting From Growing 1 53.6 55.7 -2.1
Business Activity/Production 49.6 55.2 -5.6 Contracting From Growing 1 59.9 63.3 -3.4
New Orders 55.1 55.6 -0.5 Growing Slower 3 60.3 58.5 +1.8
Employment 41.6 41.1 +0.5 Contracting Slower 19 50.8 53.1 -2.3
Supplier Deliveries 48.5 50.5 -2.0 Faster From Slowing 1 55.7 56.9 -1.2
Inventories 45.5 43.0 +2.5 Contracting Slower 15 41.3 46.9 -5.6
Prices 57.8 53.0 +4.8 Increasing Faster 2 55.0 65.0 -10.0
Backlog of Orders 48.5 53.5 -5.0 Contracting From Growing 1 52.0 53.5 -1.5
New Export Orders 54.5 53.5 +1.0 Growing Faster 2 56.0 55.5 +0.5
Imports 46.0 46.0 0.0 Contracting Same 2 51.5 51.0 +0.5
Inventory Sentiment 61.5 63.5 -2.0 Too High Slower 150   N/A  
Customers' Inventories N/A N/A N/A N/A N/A N/A 37.0 38.5 -1.5

* 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

Beef; Cheese (4); Diesel Fuel; #1 Diesel Fuel; #2 Diesel Fuel; Fuel (2); Gasoline; Laboratory Equipment; Masks [for TB/H1N1 use] (2); and Pharmacy Supplies.

Commodities Down in Price

Alloys (2); and Carbon Pipe.

Commodities in Short Supply

Masks [for TB/H1N1 use] (2) is the only commodity reported in short supply.

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



NOVEMBER 2009 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In November, the NMI registered 48.7 percent, indicating contraction in the non-manufacturing sector after two consecutive months of expansion. 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 2009 48.7 May 2009 44.0
Oct 2009 50.6 Apr 2009 43.7
Sep 2009 50.9 Mar 2009 40.8
Aug 2009 48.4 Feb 2009 41.6
Jul 2009 46.4 Jan 2009 42.9
Jun 2009 47.0 Dec 2008 40.1
Average for 12 months — 45.4
High — 50.9
Low — 40.1

Business Activity

ISM's Non-Manufacturing Business Activity Index in November registered 49.6 percent, a decrease of 5.6 percentage points when compared to the 55.2 percent registered in October. Seven industries reported increased business activity, and 10 industries reported decreased activity for the month of November. One industry reported no change from October. Comments from respondents include "Fewer orders" and "Business volumes declining, but slower."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Nov 2009 23 52 25 49.6
Oct 2009 25 58 17 55.2
Sep 2009 25 56 19 55.1
Aug 2009 28 44 28 51.3

New Orders

ISM's Non-Manufacturing New Orders Index grew in November for the third consecutive month. The index registered 55.1 percent, which is a decrease of 0.5 percentage point from the 55.6 percent registered in October. Comments from respondents include: "Demand for operation-related goods" and "Stocking up on flu supplies."

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


New Orders
%
Higher
%
Same
%
Lower

Index
Nov 2009 26 56 18 55.1
Oct 2009 25 58 17 55.6
Sep 2009 25 54 21 54.2
Aug 2009 27 46 27 49.9

Employment

Employment activity in the non-manufacturing sector contracted in November for the 22nd time in the last 23 months. ISM's Non-Manufacturing Employment Index for November registered 41.6 percent. This reflects an increase of 0.5 percentage point when compared to the 41.1 percent registered in October. Three industries reported increased employment, 11 industries reported decreased employment, and four industries reported unchanged employment compared to October. Comments from respondents include: "Permanent and seasonal layoffs" and "Some reduction in workforce due to slow second- and third-quarter sales."

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


Employment
%
Higher
%
Same
%
Lower

Index
Nov 2009 11 61 28 41.6
Oct 2009 5 68 27 41.1
Sep 2009 13 60 27 44.3
Aug 2009 8 68 24 43.5

Supplier Deliveries

The Supplier Deliveries Index registered 48.5 percent in November, indicating supplier deliveries were faster in November when compared to October. A reading above 50 percent indicates slower deliveries.

The three industries reporting slower deliveries in November are: Utilities; Health Care & Social Assistance; and Wholesale Trade. The six industries reporting faster supplier deliveries in November — listed in order — are: Management of Companies & Support Services; Professional, Scientific & Technical Services; Information; Educational Services; Finance & Insurance; and Public Administration.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Nov 2009 6 85 9 48.5
Oct 2009 6 89 5 50.5
Sep 2009 8 84 8 50.0
Aug 2009 7 84 9 49.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 45.5 percent in November, indicating that inventory levels contracted in November for the 15th consecutive month. Of the total respondents in November, 30 percent indicated they do not have inventories or do not measure them. Comments from respondents include "Continuing to consume existing levels" and "Inventory reduction due to slower previous month's sales."

The four industries reporting an increase in inventories in November are: Real Estate, Rental & Leasing; Retail Trade; Health Care & Social Assistance; and Accommodation & Food Services. The eight industries reporting decreases in inventories in November — listed in order — are: Other Services; Arts, Entertainment & Recreation; Transportation & Warehousing; Public Administration; Mining; Professional, Scientific & Technical Services; Wholesale Trade; and Information.


Inventories
%
Higher
%
Same
%
Lower

Index
Nov 2009 19 53 28 45.5
Oct 2009 15 56 29 43.0
Sep 2009 20 55 25 47.5
Aug 2009 9 68 23 43.0

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in November. ISM's Non-Manufacturing Prices Index for November registered 57.8 percent, 4.8 percentage points higher than the 53 percent reported in October. In November, the percentage of respondents reporting higher prices is 21 percent, the percentage indicating no change in prices paid is 69 percent, and 10 percent of the respondents reported lower prices.

In November, nine industries reported an increase in prices paid, in the following order: Management of Companies & Support Services; Real Estate, Rental & Leasing; Health Care & Social Assistance; Educational Services; Arts, Entertainment & Recreation; Public Administration; Wholesale Trade; Professional, Scientific & Technical Services; and Accommodation & Food Services. The four industries reporting prices as decreasing for the month of November are: Agriculture, Forestry, Fishing & Hunting; Other Services; Transportation & Warehousing; and Mining.


Prices
%
Higher
%
Same
%
Lower

Index
Nov 2009 21 69 10 57.8
Oct 2009 14 73 13 53.0
Sep 2009 9 77 14 48.8
Aug 2009 23 71 6 63.1

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in November after two consecutive months of growth. The index registered 48.5 percent, 5 percentage points lower than the 53.5 percent reported in October. Of the total respondents in November, 47 percent indicated they do not measure backlog of orders.

The three industries reporting an increase in order backlogs in November are: Construction; Transportation & Warehousing; and Health Care & Social Assistance. The five industries reporting lower backlog of orders in November are: Mining; Accommodation & Food Services; Finance & Insurance; Wholesale Trade; and Professional, Scientific & Technical Services.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Nov 2009 16 65 19 48.5
Oct 2009 19 69 12 53.5
Sep 2009 19 65 16 51.5
Aug 2009 11 60 29 41.0

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 in November for the second consecutive month. The New Export Orders Index for November registered 54.5 percent, which is an increase of 1 percentage point from October's index of 53.5 percent. Of the total respondents in November, 73 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 November are: Construction; Management of Companies & Support Services; Retail Trade; and Professional, Scientific & Technical Services. The two industries reporting a decrease in export orders in November are: Wholesale Trade; and Accommodation & Food Services.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Nov 2009 19 71 10 54.5
Oct 2009 18 71 11 53.5
Sep 2009 14 69 17 48.5
Aug 2009 27 54 19 54.0

Imports

The ISM Non-Manufacturing Imports Index registered 46 percent for the second consecutive month, indicating contraction for the month of November. In the month of November, 62 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The two industries reporting an increase in the use of imports in November are: Health Care & Social Assistance; and Retail Trade. The four industries reporting a decrease in imports for the month of November are: Educational Services; Arts, Entertainment & Recreation; Wholesale Trade; and Accommodation & Food Services.


Imports
%
Higher
%
Same
%
Lower

Index
Nov 2009 5 82 13 46.0
Oct 2009 2 88 10 46.0
Sep 2009 9 85 6 51.5
Aug 2009 10 78 12 49.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in November registered 61.5 percent. This is 2 percentage points lower than the 63.5 percent reported in October, indicating that respondents still believe their inventories are too high at this time. In November, 30 percent of respondents said their inventories were too high, 7 percent said their inventories were too low, and 63 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in November — listed in order — are: Other Services; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Accommodation & Food Services; Information; and Health Care & Social Assistance. The one industry reporting that their inventory is too low in November is Arts, Entertainment & Recreation.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Nov 2009 30 63 7 61.5
Oct 2009 30 67 3 63.5
Sep 2009 30 64 6 62.0
Aug 2009 38 59 3 67.5

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 December 2009 data will be released at 10:00 a.m. (ET) on Wednesday, January 6, 2010.


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