FOR RELEASE: December 5, 2007

Contact:

Andrea Waas, APR ISM, Vice President Tempe, Arizona 800/888-6276, Ext. 3009 E-mail: awaas@ism.ws

Business Activity at 54.1%

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 November 2007.

New Orders Index at 51.1%
Employment Index at 50.8%

(Tempe, Arizona) — Business activity in the non-manufacturing sector increased at a slower rate in November than in October, 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 56th consecutive month in November," Nieves said. He added, "The Business Activity Index decreased 1.7 percentage points to 54.1 percent for the month of November. The New Orders Index decreased with the index registering 51.1 percent. The Employment Index decreased to 50.8 percent and the Prices Index increased to 76.5 percent in November. Ten non-manufacturing industries reported increased activity in November. Members' comments in November remain mixed and concerned about the economy. The overall indication in November is continued economic growth in the non-manufacturing sector but at a slower pace than in October."

TOP PERFORMING INDUSTRIES

The 10 industries reporting growth in November — listed in order — are: Information; Retail Trade; Real Estate, Rental & Leasing; Public Administration; Other Services*; Construction; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities. The six industries reporting decreased activity from October to November are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; and Arts, Entertainment & Recreation.

WHAT RESPONDENTS ARE SAYING ...

• "The trend for reduced job awards and for business activities continues. The trend started in October. We do not see any trend for more business activity or job awards throughout the end of December 2007." (Professional, Scientific & Technical Services)
• "Third-quarter profits were significant and fourth-quarter projections are very optimistic for our corporation." (Wholesale Trade)
• "Fallout over the subprime financial markets continues to have an impact on overall business. The impact includes the levels of goods and services required to operate and the impact on budget plans into 2008." (Finance & Insurance)
• "Costs related to crude oil pricing affecting our business." (Agriculture, Forestry, Fishing & Hunting)
• "Increased activity to support newly approved and added 2008 and 2009 capital projects." (Utilities)

ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* NOVEMBER 2007
	Non-Manufacturing						Manufacturing
Index	Series Index Nov.	Series Index Oct.	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Nov.	Series Index Oct.	Percent Point Change
Business Activity/Production	54.1	55.8	-1.7	Growing	Slower	56	51.9	49.6	+2.3
New Orders	51.1	55.7	-4.6	Growing	Slower	56	52.6	52.5	+0.1
Employment	50.8	51.8	-1.0	Growing	Slower	3	47.8	52.0	-4.2
Supplier Deliveries	51.5	50.0	+1.5	Slowing	From Unchanged	1	51.7	50.6	+1.1
Inventories	50.5	49.5	+1.0	Growing	From Contracting	1	46.9	47.2	-0.3
Prices	76.5	63.5	+13.0	Increasing	Faster	54	67.5	63.0	+4.5
Backlog of Orders	48.5	43.5	+5.0	Contracting	Slower	3	41.5	46.0	-4.5
New Export Orders	55.5	56.0	-0.5	Growing	Slower	2	58.5	57.0	+1.5
Imports	49.5	55.5	-6.0	Contracting	From Growing	1	47.5	47.5	0.0
Inventory Sentiment	61.5	60.0	+1.5	"Too High"	Faster	126	N/A	N/A	N/A
Customers' Inventories	N/A	N/A	N/A				49.0	54.0	-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 (5); Corrugated/Boxes (3); Diesel Fuel (2); #1 Diesel Fuel; #2 Diesel Fuel (2); Film Resin; Freight Fuel Surcharges; Fuel (10); Gasoline (3); #2 Heating Fuel (2); Medical/Surgical Supplies; Paper; Petroleum (2); Petroleum-Based Products; and Plastic Pipe.

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.

---

NOVEMBER 2007 NON-MANUFACTURING INDEX SUMMARIES

---

Business Activity

ISM's Non-Manufacturing Business Activity Index in November registered 54.1 percent, indicating a slower rate of growth in business activity compared to October. The implication is that non-manufacturing business activity is continuing to increase for the 56th consecutive month. Ten industries reported increased business activity, and six industries reported decreased activity for the month of November.

The industries reporting growth of business activity in November are: Information; Retail Trade; Real Estate, Rental & Leasing; Public Administration; Other Services*; Construction; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities. The six industries reporting decreased activity from October to November are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; and Arts, Entertainment & Recreation.

Business Activity	% Higher	% Same	% Lower	Index
November 2007	29	51	20	54.1
October 2007	29	51	20	55.8
September 2007	25	56	19	54.8
August 2007	27	54	19	55.8

THE LAST 12 MONTHS
Month	Business Activity Index		Month	Business Activity Index
Nov 2007	54.1		May 2007	59.7
Oct 2007	55.8		Apr 2007	56.0
Sept 2007	54.8		Mar 2007	52.4
Aug 2007	55.8		Feb 2007	54.3
Jul 2007	55.8		Jan 2007	59.0
Jun 2007	60.7		Dec 2006	56.7
Average for 12 months — 56.3 High — 60.7 Low — 52.4

New Orders

ISM's Non-Manufacturing New Orders Index decreased to 51.1 percent in November from the 55.7 percent registered in October. This indicates continued expansion of new orders at a slower rate than in October. Comments from members include: "Business slow" and "Lower traffic from prior month."

Industries reporting growth of new orders in November are: Real Estate, Rental & Leasing; Information; Other Services*; Wholesale Trade; Retail Trade; Public Administration; and Health Care & Social Assistance. The industries reporting contraction of new orders in November are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; Professional, Scientific & Technical Services; and Arts, Entertainment & Recreation.

New Orders	% Higher	% Same	% Lower	Index
November 2007	20	63	17	51.1
October 2007	27	54	19	55.7
September 2007	22	59	19	53.4
August 2007	27	57	16	57.0

Employment

Employment activity in the non-manufacturing sector increased in November, but at a slower rate when compared to October. ISM's Non-Manufacturing Employment Index for November is 50.8 percent, a 1 percentage point decrease from the 51.8 percent reported in October. Five industries reported increased employment, four reported a decrease, and nine indicated employment is unchanged from October. Comments from respondents include: "Reducing staff" and "Positions remaining unfilled or being filled by outside consultants, as opposed to full-time employees."

The industries reporting growth in employment in November are: Real Estate, Rental & Leasing; Transportation & Warehousing; Information; Professional, Scientific & Technical Services; and Public Administration. The four industries reporting a reduction in employment in November are: Management of Companies & Support Services; Health Care & Social Assistance; Construction; and Arts, Entertainment & Recreation.

Employment	% Higher	% Same	% Lower	Index
November 2007	17	68	15	50.8
October 2007	17	66	17	51.8
September 2007	18	66	16	52.7
August 2007	12	70	18	47.9

Supplier Deliveries

In November, the rate of supplier deliveries decreased from October. The index registered 51.5 percent. A reading above 50 percent indicates slower deliveries.

The industries reporting slowing in supplier deliveries in November are: Other Services*; Retail Trade; Professional, Scientific & Technical Services; Information; Health Care & Social Assistance; and Public Administration. The industries reporting faster supplier deliveries in November are: Educational Services; Management of Companies & Support Services; Transportation & Warehousing; Utilities; Finance & Insurance; and Wholesale Trade.

Supplier Deliveries	% Slower	% Same	% Faster	Index
November 2007	10	83	7	51.5
October 2007	9	82	9	50.0
September 2007	7	87	6	50.5
August 2007	7	87	6	50.5

Inventories

ISM's Non-Manufacturing Inventories Index registered 50.5 percent in November, indicating that inventory levels increased in November after contracting during the month of October. Of the total respondents in November, 28 percent indicated they do not have inventories or do not measure them. Comments from members include: "Cut for cash flow" and "Increased customer orders for holiday season."

The industries reporting increases in inventories in November are: Mining; Transportation & Warehousing; Other Services*; Information; Utilities; Retail Trade; and Wholesale Trade. The industries reporting decreases in inventories in November are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Public Administration; Arts, Entertainment & Recreation; Management of Companies & Support Services; Finance & Insurance; and Health Care & Social Assistance.

Inventories	% Higher	% Same	% Lower	Index
November 2007	22	57	21	50.5
October 2007	18	63	19	49.5
September 2007	18	64	18	50.0
August 2007	26	62	12	57.0

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in November for the 54th consecutive month. ISM's Non-Manufacturing Prices Index for November registered 76.5 percent, 13 percentage points higher than October's index of 63.5 percent. In November, the percentage of respondents reporting higher prices is 46 percent. The percentage indicating no change decreased 16 percentage points to 51 percent. The percentage of respondents noting lower prices remained the same at 3 percent.

The industries reporting an increase in prices paid in November are: Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Arts, Entertainment & Recreation; Accommodation & Food Services; Transportation & Warehousing; Information; Retail Trade; Construction; Finance & Insurance; Real Estate, Rental & Leasing; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Utilities; Public Administration; and Wholesale Trade. No industry reported a decrease in prices paid. The two industries with prices unchanged in November are: Other Services* and Mining.

Prices	% Higher	% Same	% Lower	Index
November 2007	46	51	3	76.5
October 2007	30	67	3	63.5
September 2007	30	68	2	66.1
August 2007	23	68	9	58.6

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in November for the third consecutive month, registering 48.5 percent, 5 percentage points higher than the 43.5 percent reported in October. Of the total respondents in November, 37 percent indicated they do not measure backlog of orders.

The industries reporting an increase in order backlogs in November are: Information; Real Estate, Rental & Leasing; Management of Companies & Support Services; Other Services*; Wholesale Trade; and Public Administration. The industries reporting lower backlog of orders in November are: Utilities; Professional, Scientific & Technical Services; Transportation & Warehousing; Retail Trade; and Finance & Insurance.

Backlog of Orders	% Higher	% Same	% Lower	Index
November 2007	17	63	20	48.5
October 2007	4	79	17	43.5
September 2007	13	68	19	47.0
August 2007	13	74	13	50.0

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 increased for the month of November. The New Export Orders Index for November registered 55.5 percent, compared to October's index of 56 percent. Of the total respondents in November, 68 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 November are: Construction; Arts, Entertainment & Recreation; Management of Companies & Support Services; Finance & Insurance; Professional, Scientific & Technical Services; Wholesale Trade; and Retail Trade. The two industries reporting a decrease in export orders are: Accommodation & Food Services and Transportation & Warehousing.

New Export Orders	% Higher	% Same	% Lower	Index
November 2007	26	59	15	55.5
October 2007	26	60	14	56.0
September 2007	17	66	17	50.0
August 2007	19	69	12	53.5

Imports

The ISM Non-Manufacturing Imports Index contracted in November. The index registered 49.5 percent, 6 percentage points lower than October's index of 55.5 percent. In November, 60 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 November are: Transportation & Warehousing and Wholesale Trade. The industries reporting a decrease in imports for the month of November are: Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Retail Trade; and Utilities.

Imports	% Higher	% Same	% Lower	Index
November 2007	17	65	18	49.5
October 2007	23	65	12	55.5
September 2007	12	78	10	51.0
August 2007	16	78	6	55.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in November registered 61.5 percent, 1.5 percentage points higher than the 60 percent reported in October. This indicates that more non-manufacturing purchasing and supply executives feel discomfort with current levels of inventory in November than in October. In November, 28 percent of respondents felt their inventories were too high, 5 percent indicated their inventories were too low, and 67 percent said that their inventories were about right.

The industries reporting a feeling that their inventories are too high in November are: Mining; Management of Companies & Support Services; Other Services*; Wholesale Trade; Construction; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Retail Trade; Utilities; and Information. The two industries reporting that their inventories are too low are: Arts, Entertainment & Recreation and Public Administration.

Inventory Sentiment	%Too High	%About Right	%Too Low	Index
November 2007	28	67	5	61.5
October 2007	26	68	6	60.0
September 2007	27	70	3	62.0
August 2007	27	69	4	61.5

*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 December 2007 data will be released at 10:00 a.m. (ET) on Friday, January 4, 2008.

Back to Top