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April 2011 Non-Manufacturing ISM Report On Business®

FOR RELEASE: May 4, 2011


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


NMI at 52.8%

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 April 2011.


Business Activity Index at 53.7%
New Orders Index at 52.7%
Employment Index at 51.9%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in April for the 17th 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 52.8 percent in April, 4.5 percentage points lower than the 57.3 percent registered in March, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 6 percentage points to 53.7 percent, reflecting growth for the 21st consecutive month, but at a slower rate than in March. The New Orders Index decreased substantially by 11.4 percentage points to 52.7 percent. The Employment Index decreased 1.8 percentage points to 51.9 percent, indicating growth in employment for the eighth consecutive month, but at a slower rate. The Prices Index decreased 2 percentage points to 70.1 percent, indicating that prices increased at a slightly slower rate in April when compared to March. According to the NMI, 17 non-manufacturing industries reported growth in April. Respondents' comments are mixed about overall business conditions; however, they are mostly positive. Respondents' comments also indicate concern over rising fuel costs, commodity costs and the lingering uncertainty about the economy."

INDUSTRY PERFORMANCE (Based on the NMI)

The 17 industries reporting growth in April based on the NMI composite index — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; Management of Companies & Support Services; Information; Other Services; Wholesale Trade; Utilities; Public Administration; Accommodation & Food Services; Construction; Real Estate, Rental & Leasing; Educational Services; Health Care & Social Assistance; Transportation & Warehousing; Professional, Scientific & Technical Services; and Finance & Insurance. The only industry reporting contraction in April is Retail Trade.

WHAT RESPONDENTS ARE SAYING ...
  • "Business conditions [remain] unchanged. No supply impact from the Japan earthquake/tsunami, but continue to track with the supply base." (Management of Companies & Support Services)
  • "Revenues are picking up slowly, but the growth is positive as compared to last month and the same month last year." (Real Estate, Rental & Leasing)
  • "Looking forward with reserved caution. Cost of goods by this fall are a big worry." (Accommodation & Food Services)
  • "Continuing economic uncertainty will curtail or delay project spending for the immediate future." (Educational Services)
  • "Fuel prices continue to be challenging and in addition to shipping, are influencing the cost of materials." (Public Administration)
  • "We are seeing price increases in many areas, and the lead times are stretching out. Our business activities are improving at a moderate rate." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
APRIL 2011
  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 52.8 57.3 -4.5 Growing Slower 17 60.4 61.2 -0.8
Business Activity/Production 53.7 59.7 -6.0 Growing Slower 21 63.8 69.0 -5.2
New Orders 52.7 64.1 -11.4 Growing Slower 21 61.7 63.3 -1.6
Employment 51.9 53.7 -1.8 Growing Slower 8 62.7 63.0 -0.3
Supplier Deliveries 53.0 51.5 +1.5 Slowing Faster 13 60.2 63.1 -2.9
Inventories 55.5 55.5 0.0 Growing Same 3 53.6 47.4 +6.2
Prices 70.1 72.1 -2.0 Increasing Slower 21 85.5 85.0 +0.5
Backlog of Orders 55.5 56.0 -0.5 Growing Slower 4 61.0 52.5 +8.5
New Export Orders 53.5 59.0 -5.5 Growing Slower 8 62.0 56.0 +6.0
Imports 57.0 50.0 +7.0 Growing From Unchanged 1 55.5 56.5 -1.0
Inventory Sentiment 57.5 67.0 -9.5 Too High Slower 167 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 40.5 39.5 +1.0

* 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

Air Freight; Aircraft Fuel; Airfares (5); Beef; Can Liners; Carbon Pipe; Copper (3); Copper Products (5); Corrugated; Cotton (6); Cotton Products (8); #1 Diesel Fuel (7); #2 Diesel Fuel (10); Freight Charges; Fuel (16); Fuel Surcharges (4); Gasoline (7); Ink Jet Toner Cartridges; Latex Gloves (4); Lube Products; Oil Products; Packaging Materials (2); Paper (6); Petroleum; Petroleum Products (4); Plastics; Plastic Products (2); Plastic Sheet; Polyester Garments (2); Polyethylene Bags (5); Polyethylene Film; Resins; Steel (5); Steel Pipe and Fittings; Steel Products (5); Textiles; Tomatoes; and Transportation Costs.

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

Cotton (4); Cotton Products; Laptop Computers; and Servers.

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



APRIL 2011 NON-MANUFACTURING INDEX SUMMARIES


NMI

In April, the NMI registered 52.8 percent, indicating continued growth in the non-manufacturing sector for the 17th 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 2011 52.8 Oct 2010 54.6
Mar 2011 57.3 Sep 2010 53.9
Feb 2011 59.7 Aug 2010 52.8
Jan 2011 59.4 Jul 2010 53.7
Dec 2010 57.1 Jun 2010 53.5
Nov 2010 56.0 May 2010 54.8
Average for 12 months – 55.5
High – 59.7
Low – 52.8

Business Activity

ISM's Non-Manufacturing Business Activity Index in April registered 53.7 percent, a decrease of 6 percentage points when compared to the 59.7 percent registered in March. Seventeen industries reported increased business activity, and one industry reported decreased activity for the month of April. Comments from respondents include: "An increase in business activity requests from existing clients" and "Tick-up in construction activity and capital expenditure activity."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Apr 2011 34 54 12 53.7
Mar 2011 37 52 11 59.7
Feb 2011 37 51 12 66.9
Jan 2011 34 47 19 64.6

New Orders

ISM's Non-Manufacturing New Orders Index grew in April for the 21st consecutive month. The index registered 52.7 percent, which is a significant decrease of 11.4 percentage points from the 64.1 percent reported in March. Comments from respondents include: "Customers are more optimistic" and "Improved market conditions."

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


New Orders
%
Higher
%
Same
%
Lower

Index
Apr 2011 34 52 14 52.7
Mar 2011 36 55 9 64.1
Feb 2011 31 61 8 64.4
Jan 2011 36 48 16 64.9

Employment

Employment activity in the non-manufacturing sector grew in April, as ISM's Non-Manufacturing Employment Index registered 51.9 percent. This reflects a decrease of 1.8 percentage points when compared to the 53.7 percent registered in March. Twelve industries reported increased employment, five industries reported decreased employment, and one industry reported unchanged employment compared to March. Comments from respondents include: "More hiring due to budget increase and employee attrition" and "Adding staff selectively."

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


Employment
%
Higher
%
Same
%
Lower

Index
Apr 2011 26 63 11 51.9
Mar 2011 22 65 13 53.7
Feb 2011 20 68 12 55.6
Jan 2011 16 64 20 54.5

Supplier Deliveries

The Supplier Deliveries Index registered 53 percent in April, 1.5 percentage points higher than the 51.5 percent registered in March, indicating that supplier deliveries continued to slow in April. A reading above 50 percent indicates slower deliveries.

The eight industries reporting slower deliveries in April — listed in order — are: Utilities; Agriculture, Forestry, Fishing & Hunting; Mining; Accommodation & Food Services; Wholesale Trade; Other Services; Information; and Professional, Scientific & Technical Services. The three industries reporting faster supplier deliveries in April are: Retail Trade; Construction; and Transportation & Warehousing. Seven industries reported no change in supplier deliveries for the month of April compared to March.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Apr 2011 10 86 4 53.0
Mar 2011 6 91 3 51.5
Feb 2011 9 86 5 52.0
Jan 2011 11 85 4 53.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 55.5 percent in April, the same reading as reported in both March and February. Of the total respondents in April, 27 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Purposely increasing inventories in line with sales run rates" and "Buying ahead of cost increases."

The eight industries reporting an increase in inventories in April — listed in order — are: Utilities; Arts, Entertainment & Recreation; Wholesale Trade; Information; Construction; Transportation & Warehousing; Public Administration; and Professional, Scientific & Technical Services. The three industries reporting decreases in inventories in April are: Educational Services; Health Care & Social Assistance; and Retail Trade. Seven industries reported no change in inventories for the month of April compared to March.


Inventories
%
Higher
%
Same
%
Lower

Index
Apr 2011 20 71 9 55.5
Mar 2011 20 71 9 55.5
Feb 2011 22 67 11 55.5
Jan 2011 19 60 21 49.0

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in April. ISM's Non-Manufacturing Prices Index for April registered 70.1 percent, 2 percentage points lower than the 72.1 percent reported in March. In April, the percentage of respondents reporting higher prices is 57 percent, the percentage indicating no change in prices paid is 41 percent, and 2 percent of the respondents reported lower prices.

For the second consecutive month, all 18 non-manufacturing industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Arts, Entertainment & Recreation; Construction; Wholesale Trade; Accommodation & Food Services; Finance & Insurance; Transportation & Warehousing; Real Estate, Rental & Leasing; Management of Companies & Support Services; Educational Services; Professional, Scientific & Technical Services; Retail Trade; Public Administration; Information; Health Care & Social Assistance; and Other Services.


Prices
%
Higher
%
Same
%
Lower

Index
Apr 2011 57 41 2 70.1
Mar 2011 51 47 2 72.1
Feb 2011 46 50 4 73.3
Jan 2011 46 50 4 72.1

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in April for the fourth consecutive month, but at a slightly slower rate. The index registered 55.5 percent, 0.5 percentage point lower than the 56 percent reported in March. Of the total respondents in April, 40 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in April — listed in order — are: Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Mining; Wholesale Trade; Construction; Health Care & Social Assistance; Public Administration; and Transportation & Warehousing. The four industries reporting lower backlog of orders in April are: Management of Companies & Support Services; Utilities; Retail Trade; and Finance & Insurance. Six industries reported no change in order backlogs for the month of April compared to March.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Apr 2011 20 71 9 55.5
Mar 2011 20 72 8 56.0
Feb 2011 15 74 11 52.0
Jan 2011 17 67 16 50.5

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 at a slower rate in April. The New Export Orders Index for April registered 53.5 percent, which is 5.5 percentage points lower than the 59 percent registered in March. Of the total respondents in April, 66 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: Mining; Arts, Entertainment & Recreation; Construction; Information; and Wholesale Trade. The three industries reporting a decrease in export orders in April are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; and Professional, Scientific & Technical Services. Six industries reported no change in new export orders for the month of April compared to March.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Apr 2011 20 67 13 53.5
Mar 2011 26 66 8 59.0
Feb 2011 20 73 7 56.5
Jan 2011 23 61 16 53.5

Imports

The ISM Non-Manufacturing Imports Index registered 57 percent in April, which is 7 percentage points higher than the 50 percent reported in March. Fifty-nine percent of respondents reported that they do not use, or do not track, the use of imported materials.

The nine industries reporting an increase in the use of imports in April — listed in order — are: Information; Arts, Entertainment & Recreation; Other Services; Management of Companies & Support Services; Health Care & Social Assistance; Transportation & Warehousing; Professional, Scientific & Technical Services; Accommodation & Food Services; and Wholesale Trade. The two industries reporting a decrease in imports for the month of April are: Agriculture, Forestry, Fishing & Hunting; and Mining. Five industries reported no change in imports for the month of April compared to March.


Imports
%
Higher
%
Same
%
Lower

Index
Apr 2011 19 76 5 57.0
Mar 2011 11 78 11 50.0
Feb 2011 19 69 12 53.5
Jan 2011 17 73 10 53.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in April registered 57.5 percent, which is 9.5 percentage points lower than the 67 percent reported in March. This indicates that respondents believe their inventories are still too high at this time. In April, 21 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 73 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in April — listed in order — are: Mining; Other Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Wholesale Trade; Transportation & Warehousing; Finance & Insurance; and Health Care & Social Assistance. The two industries reporting that inventories are too low in April are: Public Administration and Retail Trade.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Apr 2011 21 73 6 57.5
Mar 2011 37 60 3 67.0
Feb 2011 23 69 8 57.5
Jan 2011 26 68 6 60.0

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® 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 2011 data will be released at 10:00 a.m. (ET) on Friday, June 3, 2011.



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