--- To enhance the value and performance of procurement and SCM practitioners and their organizations worldwide ---



June 2010 Non-Manufacturing ISM Report On Business®

FOR RELEASE: July 6, 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 53.8%

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 June 2010.


Business Activity Index at 58.1%
New Orders Index at 54.4%
Employment Index at 49.7%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in June for the sixth 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 53.8 percent in June, 1.6 percentage points lower than the 55.4 percent registered in May, indicating continued growth in the non-manufacturing sector, but at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased 3 percentage points to 58.1 percent, reflecting growth for the seventh consecutive month. The New Orders Index decreased 2.7 percentage points to 54.4 percent, and the Employment Index decreased 0.7 percentage point to 49.7 percent, reflecting contraction after one month of growth. The Prices Index decreased 6.8 percentage points to 53.8 percent in June, indicating that prices are still increasing but at a slower rate than in May. According to the NMI, 15 non-manufacturing industries reported growth in June. Respondents' comments are mostly positive about business conditions; however, there is concern about the effect of employment on the economic recovery."

INDUSTRY PERFORMANCE (Based on the NMI)

The 15 industries reporting growth in June based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Information; Mining; Accommodation & Food Services; Transportation & Warehousing; Wholesale Trade; Management of Companies & Support Services; Public Administration; Construction; Utilities; Health Care & Social Assistance; Retail Trade; and Professional, Scientific & Technical Services. The two industries reporting contraction in June are: Other Services and Finance & Insurance.

WHAT RESPONDENTS ARE SAYING ...
  • "The general upswing in the economy, albeit minor, has had a positive effect." (Arts, Entertainment & Recreation)
  • "Pricing pressures continue to increase as we see the economy begin to improve. Orders are still lagging in our industry." (Professional, Scientific & Technical Services)
  • "Slow pace, but better than last year at this time." (Accommodation & Food Services)
  • "Funding issues and cash flow issues continue to affect public sector procurement. Almost all capital acquisitions have been suspended." (Public Administration)
  • "We have seen a slight improvement in business activity over the past month." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JUNE 2010
  Non-Manufacturing Manufacturing
Index Series
Index
June
Series
Index
May
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
June
Series
Index
May
Percent
Point
Change
NMI/PMI 53.8 55.4 -1.6 Growing Slower 6 56.2 59.7 -3.5
Business Activity/Production 58.1 61.1 -3.0 Growing Slower 7 61.4 66.6 -5.2
New Orders 54.4 57.1 -2.7 Growing Slower 10 58.5 65.7 -7.2
Employment 49.7 50.4 -0.7 Contracting From Growing 1 57.8 59.8 -2.0
Supplier Deliveries 53.0 53.0 0.0 Slowing Same 3 57.3 61.0 -3.7
Inventories 58.5 62.5 -4.0 Growing Slower 3 45.8 45.6 +0.2
Prices 53.8 60.6 -6.8 Increasing Slower 11 57.0 77.5 -20.5
Backlog of Orders 55.5 56.0 -0.5 Growing Slower 2 57.0 59.5 -2.5
New Export Orders 48.0 53.5 -5.5 Contracting From Growing 1 56.0 62.0 -6.0
Imports 48.0 56.5 -8.5 Contracting From Growing 1 56.5 56.5 0.0
Inventory Sentiment 59.0 60.5 -1.5 Too High Slower 157 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 38.0 32.0 +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

Beef (3); Copier Paper; Corrugated Products (4); Cotton Products (2); Fiberglass Insulation; Food & Beverage; Fuel* (6); Medical Supplies; Paper Products; Pork (2); Services; Steel (2); and Steel Products (5).

Commodities Down in Price

Copper Products; Diesel Fuel; Fuel*; Gasoline; and Poly Products.

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.
*Reported as both up and down in price.



JUNE 2010 NON-MANUFACTURING INDEX SUMMARIES


NMI (Non-Manufacturing Index)

In June, the NMI registered 53.8 percent, indicating continued growth in the non-manufacturing sector for the sixth consecutive month, but at a slightly slower rate than in May. 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
June 2010 53.8 Dec 2009 49.8
May 2010 55.4 Nov 2009 48.4
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
Average for 12 months — 51.4
High — 55.4
Low — 46.7

Business Activity

ISM's Non-Manufacturing Business Activity Index in June registered 58.1 percent, a decrease of 3 percentage points when compared to the 61.1 percent registered in May. Fourteen industries reported increased business activity, and two industries reported decreased activity for the month of June. Two industries reported no change from May. Comments from respondents include: "Promotions and sales activity from months ago starting to pay off" and "Increasing demand."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
June 2010 35 56 9 58.1
May 2010 38 53 9 61.1
Apr 2010 39 51 10 60.3
Mar 2010 37 50 13 60.0

New Orders

ISM's Non-Manufacturing New Orders Index grew in June for the 10th consecutive month. The index registered 54.4 percent, which is a decrease of 2.7 percentage points from the 57.1 percent reported in May. Comments from respondents include: "Increasing demand" and "Greater utilization of strategic sourcing opportunities."

The 10 industries reporting growth of new orders in June — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; Information; Transportation & Warehousing; Accommodation & Food Services; Management of Companies & Support Services; Wholesale Trade; and Public Administration. The only industry reporting contraction of new orders in June is Other Services.


New Orders
%
Higher
%
Same
%
Lower

Index
June 2010 30 56 14 54.4
May 2010 35 52 13 57.1
Apr 2010 36 53 11 58.2
Mar 2010 37 49 14 62.3

Employment

Employment activity in the non-manufacturing sector contracted in June after one month of growth. ISM's Non-Manufacturing Employment Index for June registered 49.7 percent. This reflects a decrease of 0.7 percentage point when compared to the 50.4 percent registered in May. Eight industries reported increased employment, seven industries reported decreased employment, and three industries reported unchanged employment compared to May. Comments from respondents include: "All open positions either frozen or being eliminated. New early retirement incentives will further deplete the workforce" and "Result of attrition and hiring freeze."

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


Employment
%
Higher
%
Same
%
Lower

Index
June 2010 18 70 12 49.7
May 2010 22 65 13 50.4
Apr 2010 22 61 17 49.5
Mar 2010 16 65 19 49.8

Supplier Deliveries

The Supplier Deliveries Index registered 53 percent in June, the same rate as registered in May, and indicating that supplier deliveries continued to slow in June. A reading above 50 percent indicates slower deliveries.

The nine industries reporting slower deliveries in June — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Other Services; Utilities; Information; Accommodation & Food Services; Professional, Scientific & Technical Services; Wholesale Trade; and Transportation & Warehousing. The two industries reporting faster supplier deliveries in June are: Educational Services and Finance & Insurance.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
June 2010 10 86 4 53.0
May 2010 10 86 4 53.0
Apr 2010 13 81 6 53.5
Mar 2010 8 83 9 49.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 58.5 percent in June, indicating that inventory levels grew in June for the third consecutive month. Of the total respondents in June, 33 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Using what we have and not replenishing stock" and "Cash flow shortage is preventing ordering."

The eight industries reporting an increase in inventories in June — listed in order — are: Real Estate, Rental & Leasing; Other Services; Utilities; Information; Management of Companies & Support Services; Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; and Wholesale Trade. The three industries reporting decreases in inventories in June are: Accommodation & Food Services; Finance & Insurance; and Retail Trade.


Inventories
%
Higher
%
Same
%
Lower

Index
June 2010 26 65 9 58.5
May 2010 32 61 7 62.5
Apr 2010 26 57 17 54.5
Mar 2010 21 51 28 46.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in June, but at a slower rate than in May. ISM's Non-Manufacturing Prices Index for June registered 53.8 percent, 6.8 percentage points lower than the 60.6 percent reported in May. In June, the percentage of respondents reporting higher prices is 27 percent, the percentage indicating no change in prices paid is 64 percent, and 9 percent of the respondents reported lower prices.

In June, 10 industries reported an increase in prices paid, in the following order: Construction; Accommodation & Food Services; Arts, Entertainment & Recreation; Wholesale Trade; Retail Trade; Utilities; Health Care & Social Assistance; Public Administration; Professional, Scientific & Technical Services; and Educational Services. The two industries reporting prices as decreasing for the month of June are: Finance & Insurance and Information.


Prices
%
Higher
%
Same
%
Lower

Index
June 2010 27 64 9 53.8
May 2010 35 60 5 60.6
Apr 2010 42 56 2 64.7
Mar 2010 32 63 5 62.9

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in June for the second consecutive month. The index registered 55.5 percent, 0.5 percentage point lower than the 56 percent reported in May. Of the total respondents in June, 44 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in June — listed in order — are: Information; Management of Companies & Support Services; Other Services; Construction; Transportation & Warehousing; Public Administration; Accommodation & Food Services; and Finance & Insurance. The four industries reporting lower backlog of orders in June are: Utilities; Educational Services; Professional, Scientific & Technical Services; and Wholesale Trade.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
June 2010 20 71 9 55.5
May 2010 18 76 6 56.0
Apr 2010 18 63 19 49.5
Mar 2010 22 67 11 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 June after three consecutive months of growth. The New Export Orders Index for June registered 48 percent, which is 5.5 percentage points lower than the 53.5 percent registered in May. Of the total respondents in June, 71 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 June are: Construction; Management of Companies & Support Services; Information; and Arts, Entertainment & Recreation. The three industries reporting a decrease in export orders in June are: Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; and Professional, Scientific & Technical Services.


New Export Orders
%
Higher
%
Same
%
Lower

Index
June 2010 11 74 15 48.0
May 2010 19 69 12 53.5
Apr 2010 17 80 3 57.0
Mar 2010 21 73 6 57.5

Imports

The ISM Non-Manufacturing Imports Index contracted in June after three consecutive months of growth. The index registered 48 percent, which is 8.5 percentage points lower than the 56.5 percent reported in May. In June, 63 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The three industries reporting an increase in the use of imports in June are: Information; Professional, Scientific & Technical Services; and Arts, Entertainment & Recreation. The three industries reporting a decrease in imports for the month of June are: Mining; Agriculture, Forestry, Fishing & Hunting; and Wholesale Trade.


Imports
%
Higher
%
Same
%
Lower

Index
June 2010 7 82 11 48.0
May 2010 15 83 2 56.5
Apr 2010 15 83 2 56.5
Mar 2010 11 80 9 51.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in June registered 59 percent. This is 1.5 percentage points lower than the 60.5 percent reported in May, indicating that respondents believe their inventories are too high at this time. In June, 25 percent of respondents said their inventories were too high, 7 percent said their inventories were too low, and 68 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in June — listed in order — are: Professional, Scientific & Technical Services; Construction; Finance & Insurance; Accommodation & Food Services; Public Administration; Information; Wholesale Trade; and Health Care & Social Assistance. The only industry reporting that inventories are too low in June is Agriculture, Forestry, Fishing & Hunting.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
June 2010 25 68 7 59.0
May 2010 27 67 6 60.5
Apr 2010 15 77 8 53.5
Mar 2010 20 65 15 52.5

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 July 2010 data will be released at 10:00 a.m. (ET) on Wednesday, August 4, 2010.


Back to Top





Rate and Review this item

Rate this item:



Log in to rate or review this item.