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June 2012 Non-Manufacturing ISM Report On Business

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in June for the 30th 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 52.1 percent in June, 1.6 percentage points lower than the 53.7 percent registered in May. This indicates continued growth this month at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 51.7 percent, which is 3.9 percentage points lower than the 55.6 percent reported in May, reflecting growth for the 35th consecutive month. The New Orders Index decreased by 2.2 percentage points to 53.3 percent, and the Employment Index increased by 1.5 percentage points to 52.3 percent, indicating continued growth in employment at a faster rate. The Prices Index decreased 0.9 percentage point to 48.9 percent, indicating lower month-over-month prices for the second consecutive month. According to the NMI, 12 non-manufacturing industries reported growth in June. Respondents’ comments are mixed and vary by industry and company.”

INDUSTRY PERFORMANCE

The 12 non-manufacturing industries reporting growth in June — listed in order — are: Educational Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; Utilities; Transportation & Warehousing; Accommodation & Food Services; Public Administration; Construction; Information; Finance & Insurance; and Wholesale Trade. The five industries reporting contraction in June are: Mining; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Real Estate, Rental & Leasing; and Professional, Scientific & Technical Services.

WHAT RESPONDENTS ARE SAYING …
  • “General state of business this month is flat, with no changes.” (Construction)
  • “Business is steady and an increase over last month, as we begin our peak season.” (Arts, Entertainment & Recreation)
  • “We are starting to experience a slowdown from the modest, grinding improvements our market areas have been experiencing of late.” (Finance & Insurance)
  • “Patient counts continue to be lower than budget.” (Health Care & Social Assistance)
  • “Business is still growing, but there has been a definite slowing in growth.” (Wholesale Trade)
  • “We have noticed a slowing of customer counts and sales over the last 30 to 60 days, compared to the same period last year.” (Accommodation & Food Services)
  • “Stable business globally, but softening backlog as clients further tighten discretionary spend.” (Professional, Scientific & Technical Services)
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS*
JUNE 2012
Non-Manufacturing Manufacturing
Index Series
Index
Jun
Series
Index
May
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Jun
Series
Index
May
Percent
Point
Change
NMI/PMI 52.1 53.7 -1.6 Growing Slower 30 49.7 53.5 -3.8
Business Activity/Production 51.7 55.6 -3.9 Growing Slower 35 51.0 55.6 -4.6
New Orders 53.3 55.5 -2.2 Growing Slower 35 47.8 60.1 -12.3
Employment 52.3 50.8 +1.5 Growing Faster 6 56.6 56.9 -0.3
Supplier Deliveries 51.0 53.0 -2.0 Slowing Slower 3 48.9 48.7 +0.2
Inventories 53.0 56.0 -3.0 Growing Slower 5 44.0 46.0 -2.0
Prices 48.9 49.8 -0.9 Decreasing Faster 2 37.0 47.5 -10.5
Backlog of Orders 47.5 53.0 -5.5 Contracting From Growing 1 44.5 47.0 -2.5
New Export Orders 49.5 53.0 -3.5 Contracting From Growing 1 47.5 53.5 -6.0
Imports 53.5 53.0 +0.5 Growing Faster 7 53.5 53.5 0.0
Inventory Sentiment 64.5 63.0 +1.5 Too High Faster 181 N/A N/A N/A
Customers’ Inventories N/A N/A N/A N/A N/A N/A 48.5 43.5 +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.

 

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

Commodities Up in Price

Airfares (6); Automobiles; Gasoline* (6); Labor; Packaging Materials; Paper; and Plastic Resins.

Commodities Down in Price

Cheese (3); Copper Products; Diesel Fuel; #1 Diesel Fuel (2); #2 Diesel Fuel (2); Fuel; Gasoline* (2); Heating Fuel; and Steel Products (2).

Commodities in Short Supply

Computer Products; Gloves; and Technical/Technology Labor.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

 


JUNE 2012 NON-MANUFACTURING INDEX SUMMARIES


NMI

In June, the NMI registered 52.1 percent, indicating continued growth in the non-manufacturing sector for the 30th 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
Jun 2012 52.1 Dec 2011 53.0
May 2012 53.7 Nov 2011 52.6
Apr 2012 53.5 Oct 2011 52.6
Mar 2012 56.0 Sep 2011 52.6
Feb 2012 57.3 Aug 2011 53.8
Jan 2012 56.8 Jul 2011 53.4
Average for 12 months – 54.0
High – 57.3
Low – 52.1

 

Business Activity

ISM’s Non-Manufacturing Business Activity Index in June registered 51.7 percent, 3.9 percentage points lower than the 55.6 percent registered in May. Twelve industries reported increased business activity, and five industries reported decreased activity for the month of June. Comments from respondents include: “Business sees continuous growth” and “Number of work orders increased.”

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

Business Activity %
Higher
%
Same
%
Lower
Index
Jun 2012 28 54 18 51.7
May 2012 31 55 14 55.6
Apr 2012 34 51 15 54.6
Mar 2012 37 53 10 58.9

 

New Orders

ISM’s Non-Manufacturing New Orders Index grew in June for the 35th consecutive month. The index registered 53.3 percent, a decrease of 2.2 percentage points from the 55.5 percent reported in May. Comments from respondents include: “Improved business climate — more hiring” and “Customer counts continue to fall at a faster pace than expected.”

The 11 industries reporting growth of new orders in June — listed in order — are: Educational Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; Utilities; Information; Public Administration; Accommodation & Food Services; Transportation & Warehousing; Finance & Insurance; and Professional, Scientific & Technical Services. The three industries reporting contraction of new orders in June are: Mining; Other Services; and Wholesale Trade.

New Orders %
Higher
%
Same
%
Lower
Index
Jun 2012 28 55 17 53.3
May 2012 31 55 14 55.5
Apr 2012 31 54 15 53.5
Mar 2012 33 57 10 58.8

 

Employment

Employment activity in the non-manufacturing sector grew in June at a faster rate, as ISM’s Non-Manufacturing Employment Index registered 52.3 percent. This reflects an increase of 1.5 percentage points when compared to the 50.8 percent registered in May. Thirteen industries reported increased employment, three industries reported decreased employment, and two industries reported unchanged employment compared to May. Comments from respondents include: “Expectations of new work next month” and “Adding personnel to keep up with growth.”

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

Employment %
Higher
%
Same
%
Lower
Index
Jun 2012 28 58 14 52.3
May 2012 23 67 10 50.8
Apr 2012 26 65 9 54.2
Mar 2012 24 66 10 56.7

 

Supplier Deliveries

The Supplier Deliveries Index slowed in June for the third consecutive month, following two months of faster deliveries. The index registered 51 percent, which is 2 percentage points lower than the 53 percent reported in May. A reading above 50 percent indicates slower deliveries, and below 50 percent indicates faster deliveries.

The 10 industries reporting slower deliveries in June — listed in order — are: Construction; Educational Services; Utilities; Management of Companies & Support Services; Retail Trade; Transportation & Warehousing; Public Administration; Wholesale Trade; Finance & Insurance; and Health Care & Social Assistance. The five industries reporting faster supplier deliveries in June are: Agriculture, Forestry, Fishing & Hunting; Mining; Real Estate, Rental & Leasing; Information; and Professional, Scientific & Technical Services.

Supplier Deliveries %
Slower
%
Same
%
Faster
Index
Jun 2012 10 82 8 51.0
May 2012 9 88 3 53.0
Apr 2012 8 87 5 51.5
Mar 2012 4 91 5 49.5

 

Inventories

ISM’s Non-Manufacturing Inventories Index grew in June for the fifth consecutive month. The index registered 53 percent, which is 3 percentage points lower than the 56 percent reported in May. Of the total respondents in June, 28 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Faster deliveries from suppliers have allowed us to decrease inventories” and “Slightly lower due to strong sales.”

The eight industries reporting an increase in inventories in June — listed in order — are: Information; Other Services; Accommodation & Food Services; Construction; Retail Trade; Wholesale Trade; Utilities; and Professional, Scientific & Technical Services. The five industries reporting decreases in inventories in June are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Finance & Insurance; Health Care & Social Assistance; and Mining.

Inventories %
Higher
%
Same
%
Lower
Index
Jun 2012 22 62 16 53.0
May 2012 23 66 11 56.0
Apr 2012 24 60 16 54.0
Mar 2012 22 64 14 54.0

 

Prices

Prices paid by non-manufacturing organizations for purchased materials and services decreased in June for the second consecutive month. ISM’s Non-Manufacturing Prices Index for June registered 48.9 percent, 0.9 percentage point lower than the 49.8 percent reported in May. In June, the percentage of respondents reporting higher prices is 14 percent, the percentage indicating no change in prices paid is 73 percent, and 13 percent of the respondents reported lower prices.

Eight non-manufacturing industries reported an increase in prices paid during the month of June, in the following order: Accommodation & Food Services; Other Services; Finance & Insurance; Management of Companies & Support Services; Transportation & Warehousing; Wholesale Trade; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The eight industries reporting a decrease in prices paid during June — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Construction; Educational Services; Utilities; Public Administration; Retail Trade; and Information.

Prices %
Higher
%
Same
%
Lower
Index
Jun 2012 14 73 13 48.9
May 2012 19 72 9 49.8
Apr 2012 29 64 7 53.6
Mar 2012 40 58 2 63.9

 

Backlog of Orders

ISM’s Non-Manufacturing Backlog of Orders Index contracted in June after two consecutive months of growth. The index registered 47.5 percent, which is 5.5 percentage points lower than the 53 percent reported in May. Of the total respondents in June, 36 percent indicated they do not measure backlog of orders.

The five industries reporting an increase in order backlogs in June are: Information; Finance & Insurance; Management of Companies & Support Services; Construction; and Public Administration. The seven industries reporting lower backlog of orders in June — listed in order — are: Arts, Entertainment & Recreation; Mining; Other Services; Wholesale Trade; Health Care & Social Assistance; Accommodation & Food Services; and Retail Trade. Six industries reported no change in backlog of orders in June compared to May.

Backlog of Orders %
Higher
%
Same
%
Lower
Index
Jun 2012 13 69 18 47.5
May 2102 16 74 10 53.0
Apr 2012 15 76 9 53.0
Mar 2012 14 71 15 49.5

 

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 contracted in June for the for the first time after 10 consecutive months of growth. The New Export Orders Index for June registered 49.5 percent, which is 3.5 percentage points lower than the 53 percent reported in May. Of the total respondents in June, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The three industries reporting an increase in new export orders in June are: Arts, Entertainment & Recreation; Information; and Finance & Insurance. The six industries reporting a decrease in export orders in June — listed in order — are: Mining; Other Services; Retail Trade; Professional, Scientific & Technical Services; Construction; and Wholesale Trade. Six industries reported no change in new export orders in June compared to May.

New Export Orders %
Higher
%
Same
%
Lower
Index
Jun 2012 23 53 24 49.5
May 2012 17 72 11 53.0
Apr 2012 26 64 10 58.0
Mar 2012 15 75 10 52.5

 

Imports

The ISM Non-Manufacturing Imports Index grew in June for the seventh consecutive month. The index registered 53.5 percent, which is 0.5 percentage point higher than the 53 percent reported in May. Fifty-six percent of respondents reported that they do not use, or do not track, the use of imported materials.

The seven industries reporting an increase in the use of imports in June — listed in order — are: Finance & Insurance; Professional, Scientific & Technical Services; Information; Management of Companies & Support Services; Arts, Entertainment & Recreation; Public Administration; and Retail Trade. The only industry reporting a decrease in imports for the month of June is Wholesale Trade. Ten industries reported no change in imports for the month of June compared to May.

Imports %
Higher
%
Same
%
Lower
Index
Jun 2012 15 77 8 53.5
May 2012 8 90 2 53.0
Apr 2012 17 79 4 56.5
Mar 2012 18 76 6 56.0

 

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in June registered 64.5 percent, which is 1.5 percentage points higher than the 63 percent reported in May. This indicates that respondents believe their inventories are still too high at this time. In June, 31 percent of respondents said their inventories were too high, 2 percent said their inventories were too low, and 67 percent said their inventories were about right.

The 10 industries reporting a feeling that their inventories are too high in June — listed in order — are: Mining; Information; Finance & Insurance; Wholesale Trade; Real Estate, Rental & Leasing; Management of Companies & Support Services; Other Services; Utilities; Professional, Scientific & Technical Services; and Construction. The only industry reporting that their inventories are too low in June is Retail Trade.

Inventory Sentiment %Too
High
%About
Right
%Too
Low
Index
Jun 2012 31 67 2 64.5
May 2012 33 60 7 63.0
Apr 2012 30 62 8 61.0
Mar 2012 23 71 6 58.5
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