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 July 2008.
Institute for Supply Management, Tempe
Rose Marie Goupil, 800-888-6276, Ext. 3015
E-mail: rgoupil@ism.ws
Logo: http://www.ism.ws
Economic activity in the non-manufacturing sector contracted in July, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business(R).
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management(TM) Non-Manufacturing Business Survey Committee; and senior vice president -- supply management for Hilton Hotels Corporation. "The NMI (Non- Manufacturing Index) increased 1.3 percentage points in July to 49.5 percent, indicating contraction for the second consecutive month in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 0.3 percentage point to 49.6 percent. The New Orders Index decreased 0.7 percentage point to 47.9 percent, and the Employment Index increased 3.3 percentage points to 47.1 percent. The Prices Index decreased 3.7 percentage points to 80.8 percent in July, indicating a slower rate in price increases than in June. According to the NMI, nine non-manufacturing industries reported growth in July. Members' comments in July indicate concern about inflationary pressures and the effect on the economy. Respondents' comments are mixed about business conditions and vary by industry and company."
INDUSTRY PERFORMANCE (Based on the NMI)
The nine industries reporting growth in July based on the new NMI composite index -- listed in order -- are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services(d); Professional, Scientific & Technical Services; Educational Services; Utilities; Construction; Accommodation & Food Services; and Health Care & Social Assistance. The six industries reporting contraction in July are: Finance & Insurance; Public Administration; Wholesale Trade; Information; Transportation & Warehousing; and Retail Trade.
WHAT RESPONDENTS ARE SAYING ...
-- "Our business remains at about the same level as the previous month, with continued focus on cost reduction." (Finance & Insurance)
-- "The general state of the home-building industry has not changed since last month; however, with the commodity and code changes going into 2009, we face much higher construction costs and reduced margins across the entire supply chain." (Construction)
-- "Continue to see slowdown in local economy." (Health Care & Social Assistance)
-- "While still positive, the overall outlook for 2008 for our company is not as high as earlier in the year." (Wholesale Trade)
-- "Governmental spending for services is up this period." (Professional, Scientific & Technical Services)
(a) Non-Manufacturing ISM Report On Business(R) data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. Manufacturing ISM Report On Business(R) 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
A/C Parts; Airfares (5); Air Freight; Auto Fuel (2); Bacon (2); Bath Tissue (2); Batteries; Beef (5); Bond Paper; Bread (3); Building Materials; Butter; Carbon Pipe (2); Cereal (2); Computer Peripherals; Computer Products and Supplies; Copier Paper (6); Copper (3); Crab Legs; Dairy (2); Deliveries (2); Diesel Fuel (10); # 1 Diesel Fuel (3); # 2 Diesel Fuel (3); Flour; Food and Beverage (3); Food Products (3); Freight Charges (2); Freight Fuel Surcharges (2); Fresh Food Items; Fuel (18); Fuel Products (2); Fuel Surcharges (3); Gasoline(c) (11); Gasoline Related (3); Gloves; Green Beans; # 2 Heating Fuel; Laptop Computers; Lubricants; MRO Supplies; Natural Gas (2); Office Equipment; Paper (9); Paper Products (5); Petroleum Based Products; Plastic Can Liners (2); Plastic Films (2); Plastic Products; Plumbing Supplies; Poly Bags (2); Red Peppers; Shipping Costs (5); Soy; Stainless Steel Products (3); Steel (5); Steel Pipe and Fittings (2); Steel Products (3); Transportation Costs (3); Transportation Services (2); Travel Costs; and Valves.
Commodities Down in Price
Cable (2); Cheese; and Gasoline(c).
Commodities in Short Supply
Carbon Pipe and Sulfuric Acid are the only commodities reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
(c) Indicates reported both up and down in price.
JULY 2008 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
Beginning with the January 2008 Non-Manufacturing Report On Business(R), a composite index is now calculated as an indicator of the overall economic condition for the non-manufacturing sector. The NMI 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. July's NMI at 49.5 percent indicates contraction in the non-manufacturing sector for the second 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.
The industries reporting growth in July are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services(d); Professional, Scientific & Technical Services; Educational Services; Utilities; Construction; Accommodation & Food Services; and Health Care & Social Assistance. The industries reporting contraction in July are: Finance & Insurance; Public Administration; Wholesale Trade; Information; Transportation & Warehousing; and Retail Trade.
NMI HISTORY
Business Activity
ISM's Non-Manufacturing Business Activity Index in July registered 49.6 percent, a decrease of 0.3 percentage point when compared to the 49.9 percent registered in June. Eight industries reported increased business activity, and six industries reported decreased activity for the month of July. Four industries reported no change from June. Comments from respondents include: "Less group business than forecast"; "Inflationary pressures -- general business slowdown"; and "Careful spending."
The industries reporting growth of business activity in July are: Real Estate, Rental & Leasing; Transportation & Warehousing; Arts, Entertainment & Recreation; Other Services(d); Professional, Scientific & Technical Services; Educational Services; Health Care & Social Assistance; and Utilities. The industries reporting decreased business activity in July are: Public Administration; Finance & Insurance; Wholesale Trade; Retail Trade; Management of Companies & Support Services; and Information.
THE LAST 12 MONTHS
New Orders
ISM's Non-Manufacturing New Orders Index contracted in July for the second consecutive month. The index decreased 0.7 percentage point to 47.9 percent from the 48.6 percent registered in June.
