INDUSTRY PERFORMANCE (Based on the NMI)
The 10 non-manufacturing industries reporting growth in August based on the NMI composite index — listed in order — are: Mining; Information; Retail Trade; Wholesale Trade; Transportation & Warehousing; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Utilities; Public Administration; and Professional, Scientific & Technical Services. The five industries reporting contraction in August are: Educational Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Health Care & Social Assistance; and Finance & Insurance.
WHAT RESPONDENTS ARE SAYING …
- “Overall prices paid are increasing, while sales are still slightly behind projections.” (Public Administration)
- “This month we have seen a downward trend in sales activities due to weather and economic conditions.” (Construction)
- “Customer traffic is trending lower, but spending per person continues to increase. Labor cost savings realized through attrition, as fewer replacements are hired. The outlook for the remainder of 2011 is cautiously optimistic, with increased investment in marketing. ‘Sticky prices’ are keeping operating expenses elevated even as commodity supply eases.” (Arts, Entertainment & Recreation)
- “We had a good first half. Starting to see inflation in many of our input costs. Consumer demand is flat.” (Agriculture, Forestry, Fishing & Hunting)
- “Business is holding, but looking weaker toward fourth quarter.” (Professional, Scientific & Technical Services)
- “Business climate uncertainty is increasing.” (Management of Companies & Support Services)
COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price
Abrasives; Airfares(c) (9); Aluminum Based Products; Automobile Starters; Carbon Steel Plate; Computer and Peripherals; Copper Based Products; Cotton(c); D-Limonene; #1 Diesel Fuel(c); #2 Diesel Fuel(c) (14); Food and Beverage; Freight Charges; Fuel (20); Gasoline(c) (11); Gloves; Healthcare Related; Labor; Latex Gloves; Petroleum Products (8); Plastic Resins; Rental Equipment; Repair Parts; Resin Products; Soy Oil; 3/4-Ton Pickup Trucks (4X4); and Transmissions/Heavy Duty Vehicles.
Commodities Down in Price
Airfares(c); Cotton(c); #1 Diesel Fuel(c); #2 Diesel Fuel(c); and Gasoline(c) (3).
Commodities in Short Supply
Helium is the only commodity reported in short supply.
AUGUST 2011 NON-MANUFACTURING INDEX SUMMARIES
NMI
In August, the NMI registered 53.3 percent, indicating continued growth in the non-manufacturing sector for the 21st 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.
Business Activity
ISM’s Non-Manufacturing Business Activity Index in August registered 55.6 percent, a decrease of 0.5 percentage point when compared to the 56.1 percent registered in July. Eight industries reported increased business activity, and five industries reported decreased activity for the month of August. Comments from respondents include: “Consumers are pulling back on worries of the economy and possible job layoffs” and “New business and additional capital expense approvals.”
The industries reporting growth of business activity in August — listed in order — are: Mining; Accommodation & Food Services; Information; Utilities; Finance & Insurance; Transportation & Warehousing; Wholesale Trade; and Public Administration. The five industries reporting decreased business activity in August are: Arts, Entertainment & Recreation; Educational Services; Construction; Health Care & Social Assistance; and Retail Trade.
New Orders
ISM’s Non-Manufacturing New Orders Index grew in August for the 25th consecutive month. The index registered 52.8 percent, an increase of 1.1 percentage points from the 51.7 percent reported in July. Comments from respondents include: “More work coming online” and “Increasing capital project expenditures.”
The six industries reporting growth of new orders in August — listed in order — are: Accommodation & Food Services; Mining; Transportation & Warehousing; Professional, Scientific & Technical Services; Information; and Wholesale Trade. The six industries reporting contraction of new orders in August — listed in order — are: Educational Services; Health Care & Social Assistance; Finance & Insurance; Public Administration; Retail Trade; and Construction. Six industries reported no change in new orders in August compared to July.
Employment
Employment activity in the non-manufacturing sector grew in August, as ISM’s Non-Manufacturing Employment Index registered 51.6 percent. This reflects a decrease of 0.9 percentage point when compared to the 52.5 percent registered in July. Six industries reported increased employment, nine industries reported decreased employment, and three industries reported unchanged employment compared to July. Comments from respondents include “Adding staff to keep up with increased customer demand” and “Still understaffed even as business improves.”
The industries reporting an increase in employment in August — listed in order — are: Mining; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Information; Transportation & Warehousing; and Wholesale Trade. The industries reporting a reduction in employment in August — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Management of Companies & Support Services; Accommodation & Food Services; Other Services; Finance & Insurance; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Public Administration.
Supplier Deliveries
The Supplier Deliveries Index registered 53 percent in August, 2.5 percentage points higher than the 50.5 percent registered in July, indicating that supplier deliveries continued to slow in August. A reading above 50 percent indicates slower deliveries.
The 10 industries reporting slower deliveries in August — listed in order — are: Utilities; Arts, Entertainment & Recreation; Other Services; Retail Trade; Wholesale Trade; Mining; Information; Public Administration; Construction; and Health Care & Social Assistance. The three industries reporting faster supplier deliveries in August are: Educational Services; Transportation & Warehousing; and Finance & Insurance. Five industries reported no change in supplier deliveries in August compared to July.
Inventories
ISM’s Non-Manufacturing Inventories Index registered 53.5 percent in August, 3 percentage points lower than the 56.5 percent reading that was reported in July. Of the total respondents in August, 27 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Keeping higher levels of critical items on hand” and “Focusing on inventory reduction metrics as we approach fiscal year-end.”
The six industries reporting an increase in inventories in August — listed in order — are: Utilities; Mining; Transportation & Warehousing; Accommodation & Food Services; Professional, Scientific & Technical Services; and Construction. The seven industries reporting decreases in inventories in August — listed in order — are: Arts, Entertainment & Recreation; Health Care & Social Assistance; Finance & Insurance; Information; Retail Trade; Public Administration; and Management of Companies & Support Services.
Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased substantially in August. ISM’s Non-Manufacturing Prices Index for August registered 64.2 percent, 7.6 percentage points higher than the 56.6 percent reported in July. In August, the percentage of respondents reporting higher prices is 28 percent, the percentage indicating no change in prices paid is 64 percent, and 8 percent of the respondents reported lower prices.
Fifteen non-manufacturing industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Wholesale Trade; Other Services; Accommodation & Food Services; Finance & Insurance; Construction; Retail Trade; Educational Services; Professional, Scientific & Technical Services; Mining; Health Care & Social Assistance; Public Administration; and Transportation & Warehousing. The two industries reporting a decrease in prices paid are: Management of Companies & Support Services; and Information.
Backlog of Orders
ISM’s Non-Manufacturing Backlog of Orders Index contracted in August for the third consecutive month. The index registered 47.5 percent, 3.5 percentage points higher than the 44 percent reported in July. Of the total respondents in August, 39 percent indicated they do not measure backlog of orders.
The three industries reporting an increase in order backlogs in August are: Wholesale Trade; Professional, Scientific & Technical Services; and Mining. The eight industries reporting lower backlog of orders in August — listed in order — are: Information; Accommodation & Food Services; Management of Companies & Support Services; Utilities; Construction; Finance & Insurance; Health Care & Social Assistance; and Retail Trade. Six industries reported no change in order backlogs for the month of August compared to July.
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 August after one month of contraction. The New Export Orders Index for August registered 56.5 percent, which is 7.5 percentage points higher than the 49 percent reported in July. Of the total respondents in August, 61 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.
The 10 industries reporting an increase in new export orders in August — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Construction; Other Services; Public Administration; Mining; Retail Trade; Finance & Insurance; Accommodation & Food Services; and Professional, Scientific & Technical Services. The three industries reporting a decrease in export orders in August are: Educational Services; Information; and Wholesale Trade.
Imports
The ISM Non-Manufacturing Imports Index grew in August following two consecutive months of contraction. The index registered 53.5 percent, which is 6 percentage points higher than the 47.5 percent reported in July. Fifty-four percent of respondents reported that they do not use, or do not track, the use of imported materials.
The five industries reporting an increase in the use of imports in August are: Agriculture, Forestry, Fishing & Hunting; Construction; Accommodation & Food Services; Wholesale Trade; and Professional, Scientific & Technical Services. The three industries reporting a decrease in imports for the month of August are: Arts, Entertainment & Recreation; Information; and Transportation & Warehousing. Ten industries reported no change in imports for the month of August compared to July.
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in August registered 56 percent, which is 3.5 percentage points lower than the 59.5 percent reported in July. This indicates that respondents believe their inventories are still too high at this time. In August, 23 percent of respondents said their inventories were too high, 11 percent said their inventories were too low, and 66 percent said their inventories were about right.
The five industries reporting a feeling that their inventories are too high in August are: Information; Finance & Insurance; Management of Companies & Support Services; Utilities; and Wholesale Trade. The three industries reporting that inventories are too low in August are: Health Care & Social Assistance; Professional, Scientific & Technical Services; and Construction. Eight industries reported no change in inventory sentiment in August compared to July.
