FOR RELEASE: April 4, 2007

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

Business Activity at 52.4%

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 March 2007.

New Orders Index at 53.8%
Employment Index at 50.8%

(Tempe, Arizona) — Business activity in the non-manufacturing sector increased at a slower rate in March 2007, 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 Hotels Corporation. "Non-manufacturing business activity increased for the 48th consecutive month in March," Nieves said. He added, "Business Activity, New Orders and Employment increased at a slower rate in March than in February. The Prices Index increased 9.5 percentage points this month to 63.3 percent. Ten non-manufacturing industries reported increased activity in March. Members' comments in March indicate a concern with fuel costs, the economy and the impact on business conditions. The overall indication in March is continued economic growth in the non-manufacturing sector, but at a slower pace than in February."

TOP PERFORMING INDUSTRIES

The 10 industries reporting growth in March — listed in order — are: Utilities; Educational Services; Other Services*; Retail Trade; Finance & Insurance; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Public Administration; and Construction. The four industries reporting decreased activity from February to March are: Management of Companies & Support Services; Accommodation & Food Services; Information; and Arts, Entertainment & Recreation.

WHAT RESPONDENTS ARE SAYING ...

• "Overall core business activity is slightly slower." (Finance & Insurance)
• "Constant increases in fuel costs seem to be causing an economic downturn. Outlook remains cautiously optimistic." (Professional, Scientific & Technical Services)
• "Business activity seems to have slowed with some brightness on the horizon." (Wholesale Trade)
• "Market remains stable." (Information)
• "Business is OK but not great. We will not get the price in the market. Making our year depends upon cost control." (Agriculture, Forestry, Fishing & Hunting)

ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* MARCH 2007
	Non-Manufacturing						Manufacturing
Index	Series Index Mar	Series Index Feb	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Mar	Series Index Feb	Percent Point Change
Business Activity/Production	52.4	54.3	-1.9	Growing	Slower	48	53.0	54.1	-1.1
New Orders	53.8	54.8	-1.0	Growing	Slower	48	51.6	54.9	-3.3
Employment	50.8	52.2	-1.4	Growing	Slower	32	48.7	51.1	-2.4
Supplier Deliveries	50.0	52.5	-2.5	Unchanged	From Slowing	1	51.3	50.8	+0.5
Inventories	52.0	50.5	+1.5	Growing	Faster	2	47.5	44.6	+2.9
Prices	63.3	53.8	+9.5	Increasing	Faster	46	65.5	59.0	+6.5
Backlog of Orders	52.5	47.0	+5.5	Growing	From Contracting	1	47.0	51.5	-4.5
New Export Orders	48.5	59.0	-10.5	Contracting	From Growing	1	55.5	54.0	+1.5
Imports	50.0	54.0	-4.0	Unchanged	From Growing	1	57.5	61.5	-4.0
Inventory Sentiment	63.0	61.5	+1.5	"Too High"	Faster	118	N/A	N/A	N/A
Customers' Inventories	N/A	N/A	N/A				48.0	53.0	-5.0

* 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; Car Rental; Car Service; #1 Diesel Fuel; #2 Diesel Fuel (2); Electricity (2); Freight/Shipping (3); Fuel (2); Gasoline (5); Healthcare; #2 Heating Fuel; Hotel Costs (10); Lubricants; Office Supplies; Paper (38); Polyethylene; Stainless Bar; and Stretch Film.

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

Building Materials; Construction Services/Contractors; Construction Materials; and Glass Bottles/Containers.

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

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MARCH 2007 NON-MANUFACTURING INDEX SUMMARIES

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Business Activity

ISM's Non-Manufacturing Business Activity Index in March registered 52.4 percent compared to the seasonally adjusted 54.3 percent registered in February, indicating a slower rate of growth in business activity in March. The implication is that non-manufacturing business activity is continuing to increase for the 48th consecutive month. Ten industries reported increased business activity, and four reported decreased activity for the month of March.

The industries reporting growth of business activity in March are: Utilities; Educational Services; Other Services*; Retail Trade; Finance & Insurance; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Public Administration; and Construction. The four industries reporting contraction of business activity in March are: Management of Companies & Support Services; Accommodation & Food Services; Information; and Arts, Entertainment & Recreation.

Business Activity	% Higher	% Same	% Lower	Index
March 2007	30	52	18	52.4
February 2007	27	53	20	54.3
January 2007	30	45	25	59.0
December 2006	26	55	19	56.7

THE LAST 12 MONTHS
Month	Business Activity Index		Month	Business Activity Index
Mar 2007	52.4		Sep 2006	54.6
Feb 2007	54.3		Aug 2006	56.9
Jan 2007	59.0		Jul 2006	55.7
Dec 2006	56.7		Jun 2006	56.9
Nov 2006	58.3		May 2006	59.2
Oct 2006	57.4		Apr 2006	61.1
Average for 12 months — 56.0 High — 61.1 Low — 52.4

New Orders

ISM's Non-Manufacturing New Orders Index decreased to 53.8 percent in March from the seasonally adjusted 54.8 percent registered in February. This indicates continued expansion of new orders, but at a slower rate than in February. Comments from members include: "February's business activity was lower than January and December. We are not sure if this is a seasonal trend or if there is a slowdown in the temporary labor market"; and "General slowdown."

Industries reporting growth of new orders in March are: Other Services*; Utilities; Educational Services; Retail Trade; Construction; Professional, Scientific & Technical Services; Finance & Insurance; Wholesale Trade; and Public Administration. The industries reporting contraction of new orders in March are: Information; Health Care & Social Assistance; Accommodation & Food Services; Management of Companies & Support Services; and Arts, Entertainment & Recreation.

New Orders	% Higher	% Same	% Lower	Index
March 2007	31	48	21	53.8
February 2007	27	55	18	54.8
January 2007	27	51	22	55.4
December 2006	24	56	20	55.6

Employment

Employment activity in the non-manufacturing sector increased at a slower rate in March compared to February. This was the 32nd consecutive monthly increase in non-manufacturing employment. ISM's Non-Manufacturing Employment Index for March is 50.8 percent, a 1.4 percentage point decrease from the seasonally adjusted 52.2 percent reported in February. Eight industries reported increased employment in March, six reported a decrease, and three indicated employment is unchanged from February. Comments from respondents include: "Negative outlook on the economy"; "Open positions filled"; and "Last hiring spree before economic slowdown."

The industries reporting growth in employment in March are: Arts, Entertainment & Recreation; Other Services*; Transportation & Warehousing; Utilities; Retail Trade; Educational Services; Wholesale Trade; and Public Administration. The six industries reporting a reduction in employment in March are: Accommodation & Food Services; Management of Companies & Support Services; Real Estate, Rental & Leasing; Construction; Health Care & Social Assistance; and Professional, Scientific & Technical Services.

Employment	% Higher	% Same	% Lower	Index
March 2007	17	69	14	50.8
February 2007	18	65	17	52.2
January 2007	15	69	16	51.7
December 2006	17	71	12	53.2

Supplier Deliveries

In March, the delivery performance of suppliers to non-manufacturing organizations registered 50 percent, 2.5 percentage points lower than in February. A reading above 50 percent indicates slower deliveries. Comments from purchasing and supply executives concerning supplier deliveries in March include: "Trend is toward improving; however, commodity shortages still abound in distribution transformer segment"; and "Winter weather problems."

The industries reporting slowing in supplier deliveries in March are: Transportation & Warehousing; Real Estate, Rental & Leasing; Utilities; Retail Trade; Health Care & Social Assistance; Wholesale Trade; and Professional, Scientific & Technical Services. The seven industries reporting faster supplier deliveries in March are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Finance & Insurance; Construction; Information; Educational Services; and Public Administration.

Supplier Deliveries	% Slower	% Same	% Faster	Index
March 2007	8	84	8	50.0
February 2007	10	85	5	52.5
January 2007	15	77	8	53.5
December 2006	10	82	8	51.0

Inventories

ISM's Non-Manufacturing Inventories Index registered 52 percent in March, an increase of 1.5 percentage points compared to February. Inventories are expanding for the second consecutive month after one month of contraction. Of the total respondents in March, 33 percent indicated they do not have inventories or do not measure them. Comments from members include: "Slower business activity"; "Area of concern to cut levels"; and "Sales are down, high inventory."

The industries reporting increases in inventories in March are: Agriculture, Forestry, Fishing & Hunting; Other Services*; Transportation & Warehousing; Educational Services; Utilities; Information; Real Estate, Rental & Leasing; and Retail Trade. The industries reporting decreases in inventories in March are: Finance & Insurance; Accommodation & Food Services; Arts, Entertainment & Recreation; Public Administration; Professional, Scientific & Technical Services; and Wholesale Trade.

Inventories	% Higher	% Same	% Lower	Index
March 2007	24	56	20	52.0
February 2007	23	55	22	50.5
January 2007	18	58	24	47.0
December 2006	25	57	18	53.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in March for the 46th consecutive month (following the recent seasonal adjustments). ISM's Non-Manufacturing Prices Index for March is 63.3 percent, 9.5 percentage points higher than February's seasonally adjusted index of 53.8 percent. In March, the percentage of respondents reporting higher prices increased by 21 percentage points to 38 percent as compared to February. The percentage indicating no change decreased from 74 percent in February to 58 percent in March. The percentage of respondents noting lower prices decreased from 9 percent in February to 4 percent in March.

The industries reporting an increase in prices paid in March are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Wholesale Trade; Transportation & Warehousing; Retail Trade; Finance & Insurance; Utilities; Construction; Professional, Scientific & Technical Services; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; Educational Services; Management of Companies & Support Services; and Health Care & Social Assistance. The only industry reporting a decrease in prices in March is Information.

Prices	% Higher	% Same	% Lower	Index
March 2007	38	58	4	63.3
February 2007	17	74	9	53.8
January 2007	23	62	15	55.2
December 2006	20	71	9	59.7

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index registered 52.5 percent in March, 5.5 percentage points higher than the 47 percent reported in February. This indicates that order backlogs are increasing after contracting for three consecutive months. Of the total respondents in March, 44 percent indicated they do not measure backlog of orders. Purchasing and supply executives' comments include: "Budget restrictions are limiting funds available for purchasing thus creating a backlog of requests"; "In-house orders backlog is down approximately 20 percent, but will be back up next month (starting new orders). Forecast (sales) backlog hours remain the same."

The industries reporting an increase in order backlogs in March are: Other Services*; Utilities; Real Estate, Rental & Leasing; Accommodation & Food Services; Health Care & Social Assistance; Retail Trade; Construction; and Public Administration. The four industries reporting a decrease in order backlogs in March are: Management of Companies & Support Services; Information; Wholesale Trade; and Finance & Insurance.

Backlog of Orders	% Higher	% Same	% Lower	Index
March 2007	20	65	15	52.5
February 2007	15	64	21	47.0
January 2007	17	64	19	49.0
December 2006	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 contracted in March for the first time after 20 consecutive months of expansion. The New Export Orders Index for March is 48.5 percent, compared to February's index of 59 percent. Of the total respondents in March, 74 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The industries reporting an increase in new export orders in March are: Arts, Entertainment & Recreation; Other Services*; Retail Trade; and Finance & Insurance. The four industries reporting a decrease in new export orders in March are: Accommodation & Food Services; Information; Professional, Scientific & Technical Services; and Wholesale Trade.

New Export Orders	% Higher	% Same	% Lower	Index
March 2007	18	61	21	48.5
February 2007	25	68	7	59.0
January 2007	29	52	19	55.0
December 2006	32	59	9	61.5

Imports

In March, the ISM Non-Manufacturing Imports Index registered 50 percent, 4 percentage points lower than February's index of 54 percent. In March, 65 percent of respondents reported that they do not use or do not track the use of imported materials.

The industries reporting an increase in the use of imports in March are: Construction; Professional, Scientific & Technical Services; Retail Trade; and Wholesale Trade. The three industries reporting a decrease in imports for the month of March are: Information; Accommodation & Food Services; and Transportation & Warehousing.

Imports	% Higher	% Same	% Lower	Index
March 2007	13	74	13	50.0
February 2007	18	72	10	54.0
January 2007	14	76	10	52.0
December 2006	30	64	6	62.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in March registered 63 percent, 1.5 percentage points higher than the 61.5 percent reported in February. This indicates that non-manufacturing purchasing and supply executives feel a greater discomfort with current levels of inventory in March than they did during February. In March, 32 percent of respondents felt their inventories were too high, 6 percent indicated their inventories were too low, and 62 percent said that their inventories were about right.

The industries reporting a feeling that their inventories are too high in March are: Agriculture, Forestry, Fishing & Hunting; Other Services*; Management of Companies & Support Services; Wholesale Trade; Construction; Information; Real Estate, Rental & Leasing; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; and Accommodation & Food Services.

The two industries reporting that their inventories are too low are: Utilities and Public Administration.

Inventory Sentiment	%Too High	%About Right	%Too Low	Index
March 2007	32	62	6	63.0
February 2007	30	63	7	61.5
January 2007	35	61	4	65.5
December 2006	34	59	7	63.5

*Other Services include:
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.

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; Other Services*; and Public Administration.

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, the net difference between the number of responses in the positive economic direction (higher and slower for Supplier Deliveries) and the negative economic direction (lower and faster for Supplier Deliveries). Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. The remaining indexes have not indicated significant seasonality.

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 April 2007 data will be released at 10:00 a.m. (ET) on Thursday, May 3, 2007.

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