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April 2010 Non-Manufacturing ISM Report On Business®

FOR RELEASE: May 5, 2010


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 55.4%

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 April 2010.


Business Activity Index at 60.3%
New Orders Index at 58.2%
Employment Index at 49.5%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in April for the fourth 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; and senior vice president — supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 55.4 percent in April, the same percentage as registered in March, and indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 0.3 percentage point to 60.3 percent, reflecting growth for the fifth consecutive month. The New Orders Index decreased 4.1 percentage points to 58.2 percent, and the Employment Index decreased 0.3 percentage point to 49.5 percent. The Prices Index increased 1.8 percentage points to 64.7 percent in April, indicating an increase in prices paid from March. According to the NMI, 14 non-manufacturing industries reported growth in April. Respondents' comments are mostly positive about current business conditions; however, they vary by industry and company."

INDUSTRY PERFORMANCE (Based on the NMI)

The 14 industries reporting growth in April based on the NMI composite index — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Information; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Other Services; Wholesale Trade; Accommodation & Food Services; Construction; Finance & Insurance; Transportation & Warehousing; Mining; Retail Trade; and Public Administration. The four industries reporting contraction in April are: Utilities; Educational Services; Health Care & Social Assistance; and Professional, Scientific & Technical Services.

WHAT RESPONDENTS ARE SAYING ...
  • "Best production/service levels in 24 months." (Wholesale Trade)
  • "Selling prices for our products continue to decline." (Mining)
  • "The market and other financial indicators point to an improving economy; however, that is being overshadowed by skepticism and lack of confidence. Capital spending is being constrained by concern over the economic view in a post-stimulus era, with double-digit interest rates and mounting debt." (Educational Services)
  • "Market shows slight signs of tightening." (Information)
  • "Business conditions are improving." (Management of Companies & Support Services)
  • "There are signs of improvement which are leading us to be optimistic; however, as prices escalate the stability of the recovery is at risk." (Retail Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
APRIL 2010
  Non-Manufacturing Manufacturing
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
NMI/PMI 55.4 55.4 0.0 Growing Same 4 60.4 59.6 +0.8
Business Activity/Production 60.3 60.0 +0.3 Growing Faster 5 66.9 61.1 +5.8
New Orders 58.2 62.3 -4.1 Growing Slower 8 65.7 61.5 +4.2
Employment 49.5 49.8 -0.3 Contracting Faster 28 58.5 55.1 +3.4
Supplier Deliveries 53.5 49.5 +4.0 Slowing From Faster 1 61.3 64.9 -3.6
Inventories 54.5 46.5 +8.0 Growing From Contracting 1 49.4 55.3 -5.9
Prices 64.7 62.9 +1.8 Increasing Faster 9 78.0 75.0 +3.0
Backlog of Orders 49.5 55.5 -6.0 Contracting From Growing 1 57.5 58.0 -0.5
New Export Orders 57.0 57.5 -0.5 Growing Slower 2 61.0 61.5 -0.5
Imports 56.5 51.0 +5.5 Growing Faster 2 58.0 57.0 +1.0
Inventory Sentiment 53.5 52.5 +1.0 Too High Faster 155 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 33.0 39.0 -6.0

* 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

Airfare (4); Beef; Carbon Pipe; Copper Fittings (2); Copper Pipe; Corrugated Products (2); #1 Diesel Fuel (2); #2 Diesel Fuel (2); Envelopes; Fuel (4); Gasoline (6); LDPE Resin; Lumber and Wood Products; Medical Supplies (2); Natural Gas; OSB; Paper (3); Paper Products (2); Plastic Bags (2); Plastic Can Liners; Plastic Film (2); Resin; Resin Based Products; and Steel Products (3).

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

No commodities are reported in short supply.

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



APRIL 2010 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In April, the NMI registered 55.4 percent, the same percentage as registered in March, and indicating growth in the non-manufacturing sector for the fourth 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
Apr 2010 55.4 Oct 2009 50.1
Mar 2010 55.4 Sep 2009 50.1
Feb 2010 53.0 Aug 2009 48.2
Jan 2010 50.5 Jul 2009 46.7
Dec 2009 49.8 Jun 2009 46.3
Nov 2009 48.4 May 2009 44.5
Average for 12 months — 49.9
High — 55.4
Low — 44.5

Business Activity

ISM's Non-Manufacturing Business Activity Index in April registered 60.3 percent, an increase of 0.3 percentage point when compared to the 60 percent registered in March. Thirteen industries reported increased business activity, and three industries reported decreased activity for the month of April. Two industries reported no change from March. Comments from respondents include: "We have picked up additional market share" and "Higher demand on existing business and new business."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Apr 2010 39 51 10 60.3
Mar 2010 37 50 13 60.0
Feb 2010 23 57 20 54.8
Jan 2010 26 44 30 52.2

New Orders

ISM's Non-Manufacturing New Orders Index grew in April for the eighth consecutive month. The index registered 58.2 percent, which is a decrease of 4.1 percentage points from the 62.3 percent reported in March. Comments from respondents include: "More quotes and proposals in the field" and "Better market conditions."

The 13 industries reporting growth of new orders in April — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Information; Finance & Insurance; Management of Companies & Support Services; Accommodation & Food Services; Other Services; Wholesale Trade; Construction; Transportation & Warehousing; Professional, Scientific & Technical Services; Public Administration; and Health Care & Social Assistance. The two industries reporting contraction of new orders in April are: Retail Trade and Educational Services.


New Orders
%
Higher
%
Same
%
Lower

Index
Apr 2010 36 53 11 58.2
Mar 2010 37 49 14 62.3
Feb 2010 23 59 18 55.0
Jan 2010 26 49 25 54.7

Employment

Employment activity in the non-manufacturing sector contracted in April for the 28th consecutive month. ISM's Non-Manufacturing Employment Index for April registered 49.5 percent. This reflects a decrease of 0.3 percentage point when compared to the 49.8 percent registered in March. Nine industries reported increased employment, six industries reported decreased employment, and three industries reported unchanged employment compared to March. Comments from respondents include: "Trying to get by with existing force until new orders increase" and "Attrition with a hiring freeze."

The industries reporting an increase in employment in April — listed in order — are: Mining; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Management of Companies & Support Services; Other Services; Information; Finance & Insurance; and Wholesale Trade. The industries reporting a reduction in employment in April — listed in order — are: Real Estate, Rental & Leasing; Utilities; Educational Services; Transportation & Warehousing; Public Administration; and Health Care & Social Assistance.


Employment
%
Higher
%
Same
%
Lower

Index
Apr 2010 22 61 17 49.5
Mar 2010 16 65 19 49.8
Feb 2010 12 68 20 48.6
Jan 2010 10 62 28 44.6

Supplier Deliveries

The Supplier Deliveries Index registered 53.5 percent in April, indicating supplier deliveries were slower in April when compared to March. A reading above 50 percent indicates slower deliveries.

The seven industries reporting slower deliveries in April are: Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Other Services; Information; Accommodation & Food Services; Retail Trade; and Transportation & Warehousing. The two industries reporting faster supplier deliveries in April are: Utilities and Educational Services.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Apr 2010 13 81 6 53.5
Mar 2010 8 83 9 49.5
Feb 2010 12 83 5 53.5
Jan 2010 9 83 8 50.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 54.5 percent in April, indicating that inventory levels grew in April after three consecutive months of contraction. Of the total respondents in April, 32 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Increasing for busy season" and "Just slightly reflecting increased demand."

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


Inventories
%
Higher
%
Same
%
Lower

Index
Apr 2010 26 57 17 54.5
Mar 2010 21 51 28 46.5
Feb 2010 14 62 24 45.0
Jan 2010 16 61 23 46.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in April. ISM's Non-Manufacturing Prices Index for April registered 64.7 percent, 1.8 percentage points higher than the 62.9 percent reported in March. In April, the percentage of respondents reporting higher prices is 42 percent, the percentage indicating no change in prices paid is 56 percent, and 2 percent of the respondents reported lower prices.

In April, 17 industries reported an increase in prices paid, in the following order: Mining; Management of Companies & Support Services; Construction; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Utilities; Wholesale Trade; Accommodation & Food Services; Professional, Scientific & Technical Services; Finance & Insurance; Retail Trade; Real Estate, Rental & Leasing; Educational Services; Arts, Entertainment & Recreation; Other Services; Public Administration; and Information. No industry reported prices as decreasing for the month of April.


Prices
%
Higher
%
Same
%
Lower

Index
Apr 2010 42 56 2 64.7
Mar 2010 32 63 5 62.9
Feb 2010 21 73 6 60.4
Jan 2010 27 64 9 61.2

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in April after one month of growth. The index registered 49.5 percent, 6 percentage points lower than the 55.5 percent reported in March. Of the total respondents in April, 46 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in April — listed in order — are: Construction; Information; Other Services; Health Care & Social Assistance; Accommodation & Food Services; Wholesale Trade; and Finance & Insurance. The five industries reporting lower backlog of orders in April are: Utilities; Educational Services; Professional, Scientific & Technical Services; Transportation & Warehousing; and Public Administration.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Apr 2010 18 63 19 49.5
Mar 2010 22 67 11 55.5
Feb 2010 10 72 18 46.0
Jan 2010 13 65 22 45.5

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 April for the second consecutive month. The New Export Orders Index for April registered 57 percent, which is 0.5 percentage point lower than the 57.5 percent registered in March. Of the total respondents in April, 70 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The five industries reporting an increase in new export orders in April are: Arts, Entertainment & Recreation; Other Services; Professional, Scientific & Technical Services; Information; and Wholesale Trade. The only industry reporting a decrease in export orders in April is Accommodation & Food Services.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Apr 2010 17 80 3 57.0
Mar 2010 21 73 6 57.5
Feb 2010 15 64 21 47.0
Jan 2010 15 62 23 46.0

Imports

The ISM Non-Manufacturing Imports Index registered 56.5 percent, indicating growth for the month of April for the second consecutive month. In April, 60 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 April are: Information; Other Services; Transportation & Warehousing; Accommodation & Food Services; and Wholesale Trade. The only industry reporting a decrease in imports for the month of April is Retail Trade.


Imports
%
Higher
%
Same
%
Lower

Index
Apr 2010 15 83 2 56.5
Mar 2010 11 80 9 51.0
Feb 2010 11 75 14 48.5
Jan 2010 11 72 17 47.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in April registered 53.5 percent. This is 1 percentage point higher than the 52.5 percent reported in March, indicating that respondents believe their inventories remain slightly high at this time. In April, 15 percent of respondents said their inventories were too high, 8 percent said their inventories were too low, and 77 percent said their inventories were about right.

The five industries reporting a feeling that their inventories are too high in April are: Other Services; Mining; Finance & Insurance; Accommodation & Food Services; and Professional, Scientific & Technical Services. The two industries reporting that inventories are too low in April are: Agriculture, Forestry, Fishing & Hunting; and Retail Trade.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Apr 2010 15 77 8 53.5
Mar 2010 20 65 15 52.5
Feb 2010 26 68 6 60.0
Jan 2010 33 63 4 64.5

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 May 2010 data will be released at 10:00 a.m. (ET) on Thursday, June 3, 2010.


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