NMI September 2011 Report
Economic activity in the non-manufacturing sector grew in September for the 22nd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
“Focusing on inventory reduction as we approach our fiscal year-end”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 53 percent in September, 0.3 percentage point lower than the 53.3 percent registered in August, and indicating continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 1.5 percentage points to 57.1 percent, reflecting growth for the 26th consecutive month. The New Orders Index increased by 3.7 percentage points to 56.5 percent. The Employment Index decreased 2.9 percentage points to 48.7 percent, indicating contraction in employment after 12 consecutive months of growth. The Prices Index decreased 2.3 percentage points to 61.9 percent, indicating prices increased at a slower rate in September when compared to August. According to the NMI, nine non-manufacturing industries reported growth in September. Respondents’ comments reflect an uncertainty about future business conditions and the direction of the economy.”
INDUSTRY PERFORMANCE (Based on the NMI)
The nine non-manufacturing industries reporting growth in September based on the NMI composite index — listed in order — are: Mining; Management of Companies & Support Services; Utilities; Wholesale Trade; Transportation & Warehousing; Information; Construction; Health Care & Social Assistance; and Retail Trade. The eight industries reporting contraction in September — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Professional, Scientific & Technical Services; Real Estate, Rental & Leasing; Other Services; Accommodation & Food Services; Public Administration; and Finance & Insurance.
WHAT RESPONDENTS ARE SAYING …
- “Weak consumer confidence and high gas prices are placing downward pressure on retail sales volume.” (Information)
- “Business volume outlook and confidence across many market areas in North America appear to be softening.” (Mining)
- “It appears everyone is waiting to see what happens next. No trust in the economy or the federal government to do what is needed.” (Accommodation & Food Services)
- “The 2012 outlook is not optimistic; though we keep hoping for a rebound, we see little sign of an improved economy — nothing at least that will spur growth, investment or expansion. Improved investment performance in early 2011 caused us to begin several large capital projects, and although we have broken ground, we cannot help but question if our timing was right.” (Educational Services)
- “Third and fourth quarters appear to be slowing down in order volumes. Uncertainty over U.S. and European economy is causing clients to hold off on new orders.” (Professional, Scientific & Technical Services)
- “Negative forecast for housing market’s future leads us to think we will be at current levels of business at best for the foreseeable future.” (Wholesale Trade)
| ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS(a) SEPTEMBER 2011 | ||||||||||||||||||||
| Index | Non-Manufacturing | Manufacturing | ||||||||||||||||||
| Series Index Sep | Series Index Aug | Percent Point Change | Direction | Rate of Change | Trend(b) (Months) | Series Index Sep | Series Index Aug | Percent Point Change | ||||||||||||
| NMI/PMI | 53.0 | 53.3 | -0.3 | Growing | Slower | 22 | 51.6 | 50.6 | +1.0 | |||||||||||
| Business Activity/Production | 57.1 | 55.6 | +1.5 | Growing | Faster | 26 | 51.2 | 48.6 | +2.6 | |||||||||||
| New Orders | 56.5 | 52.8 | +3.7 | Growing | Faster | 26 | 49.6 | 49.6 | 0.0 | |||||||||||
| Employment | 48.7 | 51.6 | -2.9 | Contracting | From Growing | 1 | 53.8 | 51.8 | +2.0 | |||||||||||
| Supplier Deliveries | 49.5 | 53.0 | -3.5 | Faster | From Slowing | 1 | 51.4 | 50.6 | +0.8 | |||||||||||
| Inventories | 51.5 | 53.5 | -2.0 | Growing | Slower | 8 | 52.0 | 52.3 | -0.3 | |||||||||||
| Prices | 61.9 | 64.2 | -2.3 | Increasing | Slower | 26 | 56.0 | 55.5 | +0.5 | |||||||||||
| Backlog of Orders | 52.5 | 47.5 | +5.0 | Growing | From Contracting | 1 | 41.5 | 46.0 | -4.5 | |||||||||||
| New Export Orders | 52.0 | 56.5 | -4.5 | Growing | Slower | 2 | 53.5 | 50.5 | +3.0 | |||||||||||
| Imports | 47.5 | 53.5 | -6.0 | Contracting | From Growing | 1 | 54.5 | 55.5 | -1.0 | |||||||||||
| Inventory Sentiment | 59.0 | 56.0 | +3.0 | Too High | Faster | 172 | N/A | N/A | N/A | |||||||||||
| Customers’ Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 49.0 | 46.5 | +2.5 |
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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, Supplier Deliveries and Inventories.
(b) Number of months moving in current direction
COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price
Asphalt Products; Beef; Cleaning Supplies; Construction Services; Copper Wire; #1 Diesel Fuel(c) (2); #2 Diesel Fuel (15); Food and Beverage (2); Fuel (21); Labor; Lamps; Latex Gloves (2); Light Bulbs; Paper Products; Plastic Products; Steel Products; and Tires.
Commodities Down in Price
#1 Diesel Fuel(c) (2); Gasoline (4); and Natural Gas.
Commodities in Short Supply
#2 Diesel Fuel is the only commodity reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
(c) Reported as both up and down in price.
SEPTEMBER 2011 NON-MANUFACTURING INDEX SUMMARIES
NMI
In September, the NMI registered 53 percent, indicating continued growth in the non-manufacturing sector for the 22nd 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 | ||||||||||||||||||||||||||||||||||||||||
| Sep 2011 | 53.0 | Mar 2011 | 57.3 | ||||||||||||||||||||||||||||||||||||||||
| Aug 2011 | 53.3 | Feb 2011 | 59.7 | ||||||||||||||||||||||||||||||||||||||||
| Jul 2011 | 52.7 | Jan 2011 | 59.4 | ||||||||||||||||||||||||||||||||||||||||
| Jun 2011 | 53.3 | Dec 2010 | 57.1 | ||||||||||||||||||||||||||||||||||||||||
| May 2011 | 54.6 | Nov 2010 | 56.0 | ||||||||||||||||||||||||||||||||||||||||
| Apr 2011 | 52.8 | Oct 2010 | 54.6 | ||||||||||||||||||||||||||||||||||||||||
| Average for 12 months – 55.3 High – 59.7 Low – 52.7 |
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Business Activity
ISM’s Non-Manufacturing Business Activity Index in September registered 57.1 percent, an increase of 1.5 percentage points when compared to the 55.6 percent registered in August. Nine industries reported increased business activity, and four industries reported decreased activity for the month of September. Comments from respondents include: “Sales have continued to increase slightly” and “New business activities.”
The industries reporting growth of business activity in September — listed in order — are: Mining; Utilities; Wholesale Trade; Management of Companies & Support Services; Construction; Transportation & Warehousing; Information; Health Care & Social Assistance; and Finance & Insurance. The four industries reporting decreased business activity in September are: Arts, Entertainment & Recreation; Educational Services; Other Services; and Professional, Scientific & Technical Services. Five industries reported no change in Business Activity in September compared to August.
| Business Activity | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 27 | 59 | 14 | 57.1 | |||||||||||||||||
| Aug 2011 | 27 | 54 | 19 | 55.6 | |||||||||||||||||
| Jul 2011 | 30 | 50 | 20 | 56.1 | |||||||||||||||||
| Jun 2011 | 33 | 50 | 17 | 53.4 |
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New Orders
ISM’s Non-Manufacturing New Orders Index grew in September for the 26th consecutive month. The index registered 56.5 percent, an increase of 3.7 percentage points from the 52.8 percent reported in August. Comments from respondents include: “Expansion of procurement activity” and “Unplanned maintenance work.”
The nine industries reporting growth of new orders in September — listed in order — are: Information; Retail Trade; Transportation & Warehousing; Management of Companies & Support Services; Construction; Mining; Utilities; Wholesale Trade; and Health Care & Social Assistance. The five industries reporting contraction of new orders in September are: Arts, Entertainment & Recreation; Educational Services; Professional, Scientific & Technical Services; Other Services; and Finance & Insurance.
| New Orders | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 25 | 60 | 15 | 56.5 | |||||||||||||||||
| Aug 2011 | 27 | 50 | 23 | 52.8 | |||||||||||||||||
| Jul 2011 | 24 | 55 | 21 | 51.7 | |||||||||||||||||
| Jun 2011 | 28 | 56 | 16 | 53.6 |
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Employment
Employment activity in the non-manufacturing sector contracted in September for the first time since August 2010, as ISM’s Non-Manufacturing Employment Index registered 48.7 percent. This reflects a decrease of 2.9 percentage points when compared to the 51.6 percent registered in August. Six industries reported increased employment, 11 industries reported decreased employment, and one industry reported unchanged employment compared to August. Comments from respondents include “Reduction in department staff due to budget” and “Continue to control expenses through attrition.”
The industries reporting an increase in employment in September — listed in order — are: Mining; Management of Companies & Support Services; Wholesale Trade; Utilities; Transportation & Warehousing; and Information. The industries reporting a reduction in employment in September — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Accommodation & Food Services; Public Administration; Retail Trade; Health Care & Social Assistance; Other Services; Professional, Scientific & Technical Services; Educational Services; Finance & Insurance; and Construction.
| Employment | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 10 | 73 | 17 | 48.7 | |||||||||||||||||
| Aug 2011 | 16 | 69 | 15 | 51.6 | |||||||||||||||||
| Jul 2011 | 27 | 58 | 15 | 52.5 | |||||||||||||||||
| Jun 2011 | 27 | 61 | 12 | 54.1 |
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Supplier Deliveries
The Supplier Deliveries Index registered 49.5 percent in September, 3.5 percentage points lower than the 53 percent registered in August, indicating that supplier deliveries were faster in September. A reading above 50 percent indicates slower deliveries.
The five industries reporting slower deliveries in September are: Other Services; Mining; Educational Services; Health Care & Social Assistance; and Wholesale Trade. The four industries reporting faster supplier deliveries in September are: Finance & Insurance; Transportation & Warehousing; Information; and Utilities. Nine industries reported no change in supplier deliveries in September compared to August.
| Supplier Deliveries | %Slower | %Same | %Faster | Index | |||||||||||||||||
| Sep 2011 | 6 | 87 | 7 | 49.5 | |||||||||||||||||
| Aug 2011 | 10 | 86 | 4 | 53.0 | |||||||||||||||||
| Jul 2011 | 7 | 87 | 6 | 50.5 | |||||||||||||||||
| Jun 2011 | 9 | 86 | 5 | 52.0 |
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Inventories
ISM’s Non-Manufacturing Inventories Index registered 51.5 percent in September, 2 percentage points lower than the 53.5 percent reading that was reported in August. Of the total respondents in September, 27 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Focusing on inventory reduction as we approach our fiscal year-end” and “Higher activity; have not replenished.”
The seven industries reporting an increase in inventories in September — listed in order — are: Transportation & Warehousing; Finance & Insurance; Construction; Health Care & Social Assistance; Mining; Utilities; and Wholesale Trade. The seven industries reporting decreases in inventories in September — listed in order — are: Other Services; Arts, Entertainment & Recreation; Information; Public Administration; Professional, Scientific & Technical Services; Accommodation & Food Services; and Management of Companies & Support Services.
| Inventories | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 19 | 65 | 16 | 51.5 | |||||||||||||||||
| Aug 2011 | 21 | 65 | 14 | 53.5 | |||||||||||||||||
| Jul 2011 | 24 | 65 | 11 | 56.5 | |||||||||||||||||
| Jun 2011 | 23 | 61 | 16 | 53.5 |
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Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased at a slower rate in September. ISM’s Non-Manufacturing Prices Index for September registered 61.9 percent, 2.3 percentage points lower than the 64.2 percent reported in August. In September, the percentage of respondents reporting higher prices is 24 percent, the percentage indicating no change in prices paid is 69 percent, and 7 percent of the respondents reported lower prices.
Thirteen non-manufacturing industries reported an increase in prices paid, in the following order: Utilities; Agriculture, Forestry, Fishing & Hunting; Educational Services; Arts, Entertainment & Recreation; Other Services; Construction; Accommodation & Food Services; Professional, Scientific & Technical Services; Retail Trade; Public Administration; Wholesale Trade; Finance & Insurance; and Health Care & Social Assistance. The three industries reporting a decrease in prices paid are: Information; Transportation & Warehousing; and Mining.
| Prices | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 24 | 69 | 7 | 61.9 | |||||||||||||||||
| Aug 2011 | 28 | 64 | 8 | 64.2 | |||||||||||||||||
| Jul 2011 | 30 | 61 | 9 | 56.6 | |||||||||||||||||
| Jun 2011 | 35 | 58 | 7 | 60.9 |
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Backlog of Orders
ISM’s Non-Manufacturing Backlog of Orders Index grew in September after three consecutive months of contraction. The index registered 52.5 percent, 5 percentage points higher than the 47.5 percent reported in August. Of the total respondents in September, 43 percent indicated they do not measure backlog of orders.
The six industries reporting an increase in order backlogs in September — listed in order — are: Utilities; Transportation & Warehousing; Accommodation & Food Services; Mining; Construction; and Public Administration. The three industries reporting lower backlog of orders in September are: Other Services; Health Care & Social Assistance; and Professional, Scientific & Technical Services. Nine industries reported no change in order backlogs for the month of September compared to August.
| Backlog of Orders | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 13 | 79 | 8 | 52.5 | |||||||||||||||||
| Aug 2011 | 14 | 67 | 19 | 47.5 | |||||||||||||||||
| Jul 2011 | 6 | 76 | 18 | 44.0 | |||||||||||||||||
| Jun 2011 | 12 | 73 | 15 | 48.5 |
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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 grew in September for the second consecutive month. The New Export Orders Index for September registered 52 percent, which is 4.5 percentage points lower than the 56.5 percent reported in August. Of the total respondents in September, 66 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.
The five industries reporting an increase in new export orders in September are: Mining; Accommodation & Food Services; Other Services; Information; and Wholesale Trade. The four industries reporting a decrease in export orders in September are: Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; Public Administration; and Construction. Seven industries reported no change in export orders in September compared to August.
| New Export Orders | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 15 | 74 | 11 | 52.0 | |||||||||||||||||
| Aug 2011 | 20 | 73 | 7 | 56.5 | |||||||||||||||||
| Jul 2011 | 17 | 64 | 19 | 49.0 | |||||||||||||||||
| Jun 2011 | 20 | 74 | 6 | 57.0 |
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Imports
The ISM Non-Manufacturing Imports Index contracted in September, following one month of growth. The index registered 47.5 percent, which is 6 percentage points lower than the 53.5 percent reported in August. Fifty-five percent of respondents reported that they do not use, or do not track, the use of imported materials.
The two industries reporting an increase in the use of imports in September are: Finance & Insurance; and Accommodation & Food Services. The five industries reporting a decrease in imports for the month of September are: Arts, Entertainment & Recreation; Information; Mining; Wholesale Trade; and Other Services. Eleven industries reported no change in imports for the month of September compared to August.
| Imports | %Higher | %Same | %Lower | Index | |||||||||||||||||
| Sep 2011 | 8 | 79 | 13 | 47.5 | |||||||||||||||||
| Aug 2011 | 13 | 81 | 6 | 53.5 | |||||||||||||||||
| Jul 2011 | 14 | 67 | 19 | 47.5 | |||||||||||||||||
| Jun 2011 | 6 | 81 | 13 | 46.5 |
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Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in September registered 59 percent, which is 3 percentage points higher than the 56 percent reported in August. This indicates that respondents believe their inventories are still too high at this time. In September, 21 percent of respondents said their inventories were too high, 3 percent said their inventories were too low, and 76 percent said their inventories were about right.
The eight industries reporting a feeling that their inventories are too high in September — listed in order — are: Management of Companies & Support Services; Arts, Entertainment & Recreation; Mining; Utilities; Wholesale Trade; Finance & Insurance; Health Care & Social Assistance; and Construction. The two industries reporting that inventories are too low in September are: Professional, Scientific & Technical Services; and Public Administration. Six industries reported no change in inventory sentiment in September compared to August.
| Inventory Sentiment | %Too High | %About Right | %Too Low | Index | |||||||||||||||||
| Sep 2011 | 21 | 76 | 3 | 59.0 | |||||||||||||||||
| Aug 2011 | 23 | 66 | 11 | 56.0 | |||||||||||||||||
| Jul 2011 | 27 | 65 | 8 | 59.5 | |||||||||||||||||
| Jun 2011 | 24 | 69 | 7 | 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 October 2011 data will be released at 10:00 a.m. (ET) on Thursday, November 3, 2011.