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January 2012 Non-Manufacturing ISM Report On Business®

FOR RELEASE: February 3, 2012


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


NMI at 56.8%

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 January 2012.

This report reflects the U.S. Department of Commerce's recently completed annual adjustments to the seasonal adjustment factors used to calculate the indexes.


Business Activity Index at 59.5%
New Orders Index at 59.4%
Employment Index at 57.4%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in January for the 25th 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 56.8 percent in January, 3.8 percentage points higher than the seasonally adjusted 53 percent registered in December, and indicating continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 59.5 percent, which is 3.6 percentage points higher than the seasonally adjusted 55.9 percent reported in December, reflecting growth for the 30th consecutive month. The New Orders Index increased by 4.8 percentage points to 59.4 percent, and the Employment Index increased by 7.6 percentage points to 57.4 percent, indicating substantial growth in employment after one month of contraction. The Prices Index increased 1.5 percentage points to 63.5 percent, indicating prices increased at a slightly faster rate in January when compared to December. According to the NMI, 12 non-manufacturing industries reported growth in January. Respondents' comments are mostly positive about business conditions. There is concern about cost pressures and the sustainability of the recent spike in activity."

INDUSTRY PERFORMANCE (Based on the NMI)

The 12 non-manufacturing industries reporting growth in January based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Information; Educational Services; Transportation & Warehousing; Accommodation & Food Services; Construction; Other Services; Retail Trade; Professional, Scientific & Technical Services; Finance & Insurance; Health Care & Social Assistance; and Wholesale Trade. The four industries reporting contraction in January are: Arts, Entertainment & Recreation; Mining; Utilities; and Public Administration.

WHAT RESPONDENTS ARE SAYING ...
  • "Overall business conditions to improve. We continue to outperform previous business cycles." (Information)
  • "We are seeing increased contractor bidding and activity in Q1 2012." (Construction)
  • "Small business borrowing continues to be slow." (Finance & Insurance)
  • "New fiscal year, new budgets — expecting to show an increase in sales in first quarter." (Other Services)
  • "Economy continues to show signs of improvement and the company revenue is improving slightly, but is very susceptible to pricing and cost pressures." (Professional, Scientific & Technical Services)
  • "There seems to be some stabilization in the economy as well as [in the] supply chain. This seems to be calming inventory and sales positions." (Retail Trade)
  • "Business is still stable; however, inflation in food prices is still a problem." (Wholesale Trade)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JANUARY 2012
  Non-Manufacturing Manufacturing
Index Series
Index
Jan
Series
Index
Dec
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Jan
Series
Index
Dec
Percent
Point
Change
NMI/PMI 56.8 53.0 +3.8 Growing Faster 25 54.1 53.1 +1.0
Business Activity/Production 59.5 55.9 +3.6 Growing Faster 30 55.7 58.9 -3.2
New Orders 59.4 54.6 +4.8 Growing Faster 30 57.6 54.8 +2.8
Employment 57.4 49.8 +7.6 Growing From Contracting 1 54.3 54.8 -0.5
Supplier Deliveries 51.0 51.5 -0.5 Slowing Slower 2 53.6 51.5 +2.1
Inventories 47.0 48.5 -1.5 Contracting Faster 2 49.5 45.5 +4.0
Prices 63.5 62.0 +1.5 Increasing Faster 30 55.5 47.5 +8.0
Backlog of Orders 49.5 45.5 +4.0 Contracting Slower 4 52.5 48.0 +4.5
New Export Orders 56.5 51.0 +5.5 Growing Faster 6 55.0 53.0 +2.0
Imports 55.0 54.0 +1.0 Growing Faster 2 52.5 54.0 -1.5
Inventory Sentiment 58.5 59.5 -1.0 Too High Slower 176 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 47.5 42.5 +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 and Supplier Deliveries.

** Number of months moving in current direction.

Indexes reflect newly released seasonal adjustment factors.


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

Commodities Up in Price

Airfares; Beef; Chemical Products; Chicken; Crab; Coffee (2); #1 Diesel Fuel (2); #2 Diesel Fuel (3); Fuel; Gasoline; Medical Supplies (2); Paper; Petroleum Based Products; Resin Based Products; Vehicles; and Wire.

Commodities Down in Price

Corrugated Cartons is the only commodity reported down in price.

Commodities in Short Supply

Crab; #2 Diesel Fuel (2); Fiber Cable; and Pharmaceuticals.

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



JANUARY 2012 NON-MANUFACTURING INDEX SUMMARIES


NMI

In January, the NMI registered 56.8 percent, indicating continued growth in the non-manufacturing sector for the 25th 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
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
Aug 2011 53.8 Feb 2011 59.0
Average for 12 months – 54.4
High – 59.0
Low – 52.6

Business Activity

ISM's Non-Manufacturing Business Activity Index in January registered 59.5 percent, 3.6 percentage points higher than the seasonally adjusted 55.9 percent registered in December. Ten industries reported increased business activity, and four industries reported decreased activity for the month of January. Comments from respondents include: "Expenditures and projects that were pushed back on in late 2011 are now being executed" and "Seasonal growth/improved economic environment."

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


Business Activity
%
Higher
%
Same
%
Lower

Index
Jan 2012 28 54 18 59.5
Dec 2011 28 54 18 55.9
Nov 2011 26 55 19 56.1
Oct 2011 24 57 19 53.3

New Orders

ISM's Non-Manufacturing New Orders Index grew in January for the 30th consecutive month. The index registered 59.4 percent, an increase of 4.8 percentage points from the seasonally adjusted 54.6 percent reported in December. Comments from respondents include: "2012 capital budgets drive more orders/requests" and "Increased requests for proposal."

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


New Orders
%
Higher
%
Same
%
Lower

Index
Jan 2012 28 57 15 59.4
Dec 2011 24 57 19 54.6
Nov 2011 23 61 16 54.1
Oct 2011 23 57 20 52.7

Employment

Employment activity in the non-manufacturing sector grew substantially in January, as ISM's Non-Manufacturing Employment Index registered 57.4 percent. This reflects an increase of 7.6 percentage points when compared to the seasonally adjusted 49.8 percent registered in December. Nine industries reported increased employment, five industries reported decreased employment, and four industries reported unchanged employment compared to December. Comments from respondents include: "Ramping up to meet increase in revenues due to expansion and acquisitions" and "More job awards."

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


Employment
%
Higher
%
Same
%
Lower

Index
Jan 2012 18 66 16 57.4
Dec 2011 14 68 18 49.8
Nov 2011 15 68 17 50.3
Oct 2011 16 64 20 52.3

Supplier Deliveries

The Supplier Deliveries Index registered 51 percent in January, 0.5 percentage point lower than the 51.5 percent registered in December, indicating that supplier deliveries were slower in January. A reading above 50 percent indicates slower deliveries.

The eight industries reporting slower deliveries in January — listed in order — are: Mining; Retail Trade; Educational Services; Utilities; Information; Public Administration; Professional, Scientific & Technical Services; and Wholesale Trade. The four industries reporting faster supplier deliveries in January are: Construction; Other Services; Transportation & Warehousing; and Finance & Insurance. Six industries reported no change in supplier deliveries in January compared to December.


Supplier Deliveries
%
Slower
%
Same
%
Faster

Index
Jan 2012 7 88 5 51.0
Dec 2011 9 85 6 51.5
Nov 2011 4 92 4 50.0
Oct 2011 7 90 3 52.0

Inventories

ISM's Non-Manufacturing Inventories Index contracted in January. The index registered 47 percent, which is 1.5 percentage points lower than the 48.5 percent reading that was reported in December. Of the total respondents in January, 26 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "High sales lowered inventory" and "Bleeding down inventory and liquidating obsolete material."

The five industries reporting an increase in inventories in January are: Management of Companies & Support Services; Real Estate, Rental & Leasing; Mining; Information; and Construction. The 11 industries reporting decreases in inventories in January — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Utilities; Retail Trade; Finance & Insurance; Transportation & Warehousing; Professional, Scientific & Technical Services; Wholesale Trade; Other Services; and Health Care & Social Assistance.


Inventories
%
Higher
%
Same
%
Lower

Index
Jan 2012 16 62 22 47.0
Dec 2011 19 59 22 48.5
Nov 2011 20 65 15 52.5
Oct 2011 14 63 23 45.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased at a slightly faster rate in January. ISM's Non-Manufacturing Prices Index for January registered 63.5 percent, 1.5 percentage points higher than the seasonally adjusted 62 percent reported in December. In January, the percentage of respondents reporting higher prices is 31 percent, the percentage indicating no change in prices paid is 64 percent, and 5 percent of the respondents reported lower prices.

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


Prices
%
Higher
%
Same
%
Lower

Index
Jan 2012 31 64 5 63.5
Dec 2011 23 70 7 62.0
Nov 2011 23 72 5 62.2
Oct 2011 21 68 11 61.0

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index contracted in January for the seventh time in eight months. The index registered 49.5 percent, 4 percentage points higher than the 45.5 percent reported in December. Of the total respondents in January, 39 percent indicated they do not measure backlog of orders.

The four industries reporting an increase in order backlogs in January are: Retail Trade; Information; Other Services; and Construction. The four industries reporting lower backlog of orders in January are: Management of Companies & Support Services; Mining; Professional, Scientific & Technical Services; and Public Administration. Ten industries reported no change in order backlogs for the month of January compared to December.


Backlog of Orders
%
Higher
%
Same
%
Lower

Index
Jan 2012 16 67 17 49.5
Dec 2011 11 69 20 45.5
Nov 2011 13 70 17 48.0
Oct 2011 10 74 16 47.0

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 January for the sixth consecutive month. The New Export Orders Index for January registered 56.5 percent, which is 5.5 percentage points higher than the 51 percent reported in December. Of the total respondents in January, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The seven industries reporting an increase in new export orders in January — listed in order — are: Retail Trade; Other Services; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; and Information. The three industries reporting a decrease in export orders in January are: Management of Companies & Support Services; Professional, Scientific & Technical Services; and Wholesale Trade. Six industries reported no change in new export orders in January compared to December.


New Export Orders
%
Higher
%
Same
%
Lower

Index
Jan 2012 24 65 11 56.5
Dec 2011 16 70 14 51.0
Nov 2011 18 75 7 55.5
Oct 2011 21 66 13 54.0

Imports

The ISM Non-Manufacturing Imports Index grew in January for the second consecutive month. The index registered 55 percent, which is 1 percentage point higher than the 54 percent reported in December. Fifty-five 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 January — listed in order — are: Management of Companies & Support Services; Information; Finance & Insurance; Other Services; Construction; Public Administration; Transportation & Warehousing; Accommodation & Food Services; and Wholesale Trade. The two industries reporting a decrease in imports for the month of January are: Retail Trade; and Arts, Entertainment & Recreation. Seven industries reported no change in imports for the month of January compared to December.


Imports
%
Higher
%
Same
%
Lower

Index
Jan 2012 17 76 7 55.0
Dec 2011 13 82 5 54.0
Nov 2011 12 73 15 48.5
Oct 2011 10 76 14 48.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in January registered 58.5 percent, which is 1 percentage point lower than the 59.5 percent reported in December. This indicates that respondents believe their inventories are still too high at this time. In January, 24 percent of respondents said their inventories were too high, 7 percent said their inventories were too low, and 69 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in January — listed in order — are: Management of Companies & Support Services; Utilities; Finance & Insurance; Wholesale Trade; Information; Other Services; Mining; and Health Care & Social Assistance. The two industries reporting that their inventories are too low in January are: Accommodation & Food Services; and Construction.


Inventory Sentiment
%Too
High
%About
Right
%Too
Low

Index
Jan 2012 24 69 7 58.5
Dec 2011 26 67 7 59.5
Nov 2011 31 64 5 63.0
Oct 2011 20 75 5 57.5

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 (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 February 2012 data will be released at 10:00 a.m. (ET) on Monday, March 5, 2012.



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