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February 2012 Non-Manufacturing ISM Report On Business®

FOR RELEASE: March 5, 2012


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


NMI at 57.3%

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 February 2012.


Business Activity Index at 62.6%
New Orders Index at 61.2%
Employment Index at 55.7%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in February for the 26th 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 57.3 percent in February, 0.5 percentage point higher than the 56.8 percent registered in January, and indicating continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 62.6 percent, which is 3.1 percentage points higher than the 59.5 percent reported in January, reflecting growth for the 31st consecutive month. The New Orders Index increased by 1.8 percentage points to 61.2 percent, and the Employment Index decreased by 1.7 percentage points to 55.7 percent, indicating continued growth in employment, but at a slower rate. The Prices Index increased 4.9 percentage points to 68.4 percent, indicating prices increased at a faster rate in February when compared to January. According to the NMI, 14 non-manufacturing industries reported growth in February. The majority of comments from the respondents reflect a growing level of optimism about business conditions and the overall economy. There is a concern about inflation, rising fuel prices and petroleum-based product costs."

INDUSTRY PERFORMANCE

The 14 non-manufacturing industries reporting growth in February — listed in order — are: Real Estate, Rental & Leasing; Educational Services; Wholesale Trade; Other Services; Transportation & Warehousing; Finance & Insurance; Construction; Arts, Entertainment & Recreation; Public Administration; Accommodation & Food Services; Utilities; Professional, Scientific & Technical Services; Mining; and Information. The three industries reporting contraction in February are: Management of Companies & Support Services; Retail Trade; and Health Care & Social Assistance.

WHAT RESPONDENTS ARE SAYING ...
  • "Year-over-year and month-over-month growth continues. Market conditions improved dramatically." (Information)
  • "Although customer traffic continues to decline, discretionary spending per capita is increasing. There is a bit more confidence regarding current economic conditions, spurring on slightly more aggressive marketing to capture new customers and encourage repeat visits." (Arts, Entertainment & Recreation)
  • "Business is generally flat, but showing signs of improvement." (Health Care & Social Assistance)
  • "Bracing for impact of fuel price increases on delivered commodity prices." (Educational Services)
  • "Optimism is all around, but sales remain sluggish. Activity shows interest, but market [is] very price sensitive." (Professional, Scientific & Technical Services)
  • "Signs are building that things are starting to settle and business is stabilizing. Although orders aren't increasing rapidly, they are steady and consistent instead of the radical swings of the past two years. We hope that this trend will continue." (Retail Trade)
  • "Demand [is] gradually increasing for most business sectors." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
FEBRUARY 2012
  Non-Manufacturing Manufacturing
Index Series
Index
Feb
Series
Index
Jan
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Feb
Series
Index
Jan
Percent
Point
Change
NMI/PMI 57.3 56.8 +0.5 Growing Faster 26 52.4 54.1 -1.7
Business Activity/Production 62.6 59.5 +3.1 Growing Faster 31 55.3 55.7 -0.4
New Orders 61.2 59.4 +1.8 Growing Faster 31 54.9 57.6 -2.7
Employment 55.7 57.4 -1.7 Growing Slower 2 53.2 54.3 -1.1
Supplier Deliveries 49.5 51.0 -1.5 Faster From Slower 1 49.0 53.6 -4.6
Inventories 53.5 47.0 +6.5 Growing From Contracting 1 49.5 49.5 0.0
Prices 68.4 63.5 +4.9 Increasing Faster 31 61.5 55.5 +6.0
Backlog of Orders 53.0 49.5 +3.5 Growing From Contracting 1 52.0 52.5 -0.5
New Export Orders 54.5 56.5 -2.0 Growing Slower 7 59.5 55.0 +4.5
Imports 52.0 55.0 -3.0 Growing Slower 3 54.0 52.5 +1.5
Inventory Sentiment 61.5 58.5 +3.0 Too High Faster 177 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 46.0 47.5 -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 and Supplier Deliveries.
** Number of months moving in current direction.


COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY

Commodities Up in Price

Airfares (2); Asphalt; Copper Products; Crab (2); Diesel; #1 Diesel Fuel (3); #2 Diesel Fuel (4); Equipment Repair Parts; Fuel (2); Furniture; Gasoline (2); Gloves; #2 Heating Fuel; Lab Chemicals; Labor; Lumber; Petroleum Based Products (2); Plastic Film; Plastic Products; Poly Film; Steel Products; Tires — Large; and Wire Mesh.

Commodities Down in Price

Cotton Products; Natural Gas; Paper; and Paper Tissues.

Commodities in Short Supply

Crab (2) is the only commodity reported in short supply.

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



FEBRUARY 2012 NON-MANUFACTURING INDEX SUMMARIES


NMI

In February, the NMI registered 57.3 percent, indicating continued growth in the non-manufacturing sector for the 26th 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
Feb 2012 57.3 Aug 2011 53.8
Jan 2012 56.8 Jul 2011 53.4
Dec 2011 53.0 Jun 2011 53.3
Nov 2011 52.6 May 2011 54.5
Oct 2011 52.6 Apr 2011 54.4
Sep 2011 52.6 Mar 2011 56.3
Average for 12 months – 54.2
High – 57.3
Low – 52.6

Business Activity

ISM's Non-Manufacturing Business Activity Index in February registered 62.6 percent, 3.1 percentage points higher than the 59.5 percent registered in January. Fifteen industries reported increased business activity, and two industries reported decreased activity for the month of February. Comments from respondents include: "New year project initiatives leading to more activity" and "Improved economic environment."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Feb 2012 34 52 14 62.6
Jan 2012 28 54 18 59.5
Dec 2011 28 54 18 55.9
Nov 2011 26 55 19 56.1

New Orders

ISM's Non-Manufacturing New Orders Index grew in February for the 31st consecutive month. The index registered 61.2 percent, an increase of 1.8 percentage points from the 59.4 percent reported in January. Comments from respondents include: "Expansion of business" and "Increased orders to meet new forecast by sales for spring."

The 12 industries reporting growth of new orders in February — listed in order — are: Real Estate, Rental & Leasing; Construction; Other Services; Finance & Insurance; Educational Services; Arts, Entertainment & Recreation; Public Administration; Wholesale Trade; Accommodation & Food Services; Transportation & Warehousing; Professional, Scientific & Technical Services; and Utilities. The four industries reporting contraction of new orders in February are: Management of Companies & Support Services; Retail Trade; Mining; and Health Care & Social Assistance.


New Orders
%
Higher
%
Same
%
Lower

Index
Feb 2012 31 58 11 61.2
Jan 2012 28 57 15 59.4
Dec 2011 24 57 19 54.6
Nov 2011 23 61 16 54.1

Employment

Employment activity in the non-manufacturing sector grew in February at a slower rate, as ISM's Non-Manufacturing Employment Index registered 55.7 percent. This reflects a decrease of 1.7 percentage points when compared to the 57.4 percent registered in January. Nine industries reported increased employment, six industries reported decreased employment, and three industries reported unchanged employment compared to January. Comments from respondents include: "While higher, employment growth is leveling off" and "Finally replacing staff after months of holding off."

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


Employment
%
Higher
%
Same
%
Lower

Index
Feb 2012 17 74 9 55.7
Jan 2012 18 66 16 57.4
Dec 2011 14 68 18 49.8
Nov 2011 15 68 17 50.3

Supplier Deliveries

The Supplier Deliveries Index registered 49.5 percent in February, 1.5 percentage points lower than the 51 percent registered in January, indicating that supplier deliveries were faster in February. A reading above 50 percent indicates slower deliveries, and below 50 percent indicates faster deliveries.

The five industries reporting slower deliveries in February are: Mining; Educational Services; Public Administration; Wholesale Trade; and Transportation & Warehousing. The four industries reporting faster supplier deliveries in February are: Management of Companies & Support Services; Construction; Other Services; and Finance & Insurance. Nine industries reported no change in supplier deliveries in February compared to January.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Feb 2012 4 91 5 49.5
Jan 2012 7 88 5 51.0
Dec 2011 9 85 6 51.5
Nov 2011 4 92 4 50.0

Inventories

ISM's Non-Manufacturing Inventories Index increased in February. The index registered 53.5 percent, which is 6.5 percentage points higher than the 47 percent reading that was reported in January. Of the total respondents in February, 26 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Growth of new brands/suppliers" and "Higher sales."

The 10 industries reporting an increase in inventories in February — listed in order — are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Utilities; Mining; Professional, Scientific & Technical Services; Construction; Wholesale Trade; Transportation & Warehousing; Accommodation & Food Services; and Public Administration. The two industries reporting decreases in inventories in February are: Health Care & Social Assistance; and Information.


Inventories
%
Higher
%
Same
%
Lower

Index
Feb 2012 20 67 13 53.5
Jan 2012 16 62 22 47.0
Dec 2011 19 59 22 48.5
Nov 2011 20 65 15 52.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased at a faster rate in February. ISM's Non-Manufacturing Prices Index for February registered 68.4 percent, 4.9 percentage points higher than the 63.5 percent reported in January. In February, the percentage of respondents reporting higher prices is 41 percent, the percentage indicating no change in prices paid is 55 percent, and 4 percent of the respondents reported lower prices.

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


Prices
%
Higher
%
Same
%
Lower

Index
Feb 2012 41 55 4 68.4
Jan 2012 31 64 5 63.5
Dec 2011 23 70 7 62.0
Nov 2011 23 72 5 62.2

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in February after contracting for four consecutive months. The index registered 53 percent, 3.5 percentage points higher than the 49.5 percent reported in January. Of the total respondents in February, 34 percent indicated they do not measure backlog of orders.

The nine industries reporting an increase in order backlogs in February — listed in order — are: Construction; Mining; Real Estate, Rental & Leasing; Information; Educational Services; Other Services; Finance & Insurance; Wholesale Trade; and Transportation & Warehousing. The six industries reporting lower backlog of orders in February — listed in order — are: Arts, Entertainment & Recreation; Retail Trade; Management of Companies & Support Services; Utilities; Health Care & Social Assistance; and Professional, Scientific & Technical Services.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Feb 2012 20 66 14 53.0
Jan 2012 16 67 17 49.5
Dec 2011 11 69 20 45.5
Nov 2011 13 70 17 48.0

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 February for the seventh consecutive month. The New Export Orders Index for February registered 54.5 percent, which is 2 percentage points lower than the 56.5 percent reported in January. Of the total respondents in February, 66 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 February — listed in order — are: Other Services; Mining; Information; Educational Services; Accommodation & Food Services; and Wholesale Trade. The five industries reporting a decrease in export orders in February are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; Professional, Scientific & Technical Services; and Construction.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Feb 2012 24 61 15 54.5
Jan 2012 24 65 11 56.5
Dec 2011 16 70 14 51.0
Nov 2011 18 75 7 55.5

Imports

The ISM Non-Manufacturing Imports Index grew in February for the third consecutive month. The index registered 52 percent, which is 3 percentage points lower than the 55 percent reported in January. Fifty-eight percent of respondents reported that they do not use, or do not track, the use of imported materials.

The six industries reporting an increase in the use of imports in February — listed in order — are: Other Services; Information; Professional, Scientific & Technical Services; Mining; Accommodation & Food Services; and Wholesale Trade. The four industries reporting a decrease in imports for the month of February are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Finance & Insurance; and Retail Trade. Seven industries reported no change in imports for the month of February compared to January.


Imports
%
Higher
%
Same
%
Lower

Index
Feb 2012 17 70 13 52.0
Jan 2012 17 76 7 55.0
Dec 2011 13 82 5 54.0
Nov 2011 12 73 15 48.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in February registered 61.5 percent, which is 3 percentage points higher than the 58.5 percent reported in January. This indicates that respondents believe their inventories are still too high at this time. In February, 29 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 65 percent said their inventories were about right.

The 11 industries reporting a feeling that their inventories are too high in February — listed in order — are: Management of Companies & Support Services; Other Services; Wholesale Trade; Transportation & Warehousing; Finance & Insurance; Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; Public Administration; Utilities; Health Care & Social Assistance; and Construction. The two industries reporting that their inventories are too low in February are: Accommodation & Food Services; and Retail Trade.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Feb 2012 29 65 6 61.5
Jan 2012 24 69 7 58.5
Dec 2011 26 67 7 59.5
Nov 2011 31 64 5 63.0

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 March 2012 data will be released at 10:00 a.m. (ET) on Wednesday, April 4, 2012.



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