NMI June 2012 Report
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®.
“We have noticed a slowing of customer counts and sales over the last 30 to 60 days, compared to the same period last year.”Tweet this
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(a) JUNE 2012 | ||||||||||||||||||||
| Index | Non-Manufacturing | Manufacturing | ||||||||||||||||||
| Series Index Jun | Series Index May | Percent Point Change | Direction | Rate of Change | Trend(b) (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 |
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(a) 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.
(b) 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(c) (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(c) (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.
(c) 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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 2012 | 16 | 74 | 10 | 53.0 | |||||||||||||||||
| Apr 2012 | 15 | 76 | 9 | 53.0 | |||||||||||||||||
| Mar 2012 | 14 | 71 | 15 | 49.5 |
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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 |
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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 |
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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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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 July 2012 data will be released at 10:00 a.m. (ET) on Friday, August 3, 2012.