Economic activity in the United States non-manufacturing sector grew in February for the second consecutive month, say the nation's purchasing and supply executives in the Institute for Supply Management's latest Non-Manufacturing ISM Report On Business.
The report was issued March 3 by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide.
"The NMI (Non-Manufacturing Index) registered 53 percent in February, 2.5 percentage points higher than the seasonally adjusted 50.5 percent registered in January, indicating growth in the non-manufacturing sector," said Nieves. "The Non-Manufacturing Business Activity Index increased 2.6 percentage points to 54.8 percent, reflecting growth for the third consecutive month. The New Orders Index increased 0.3 percentage point to 55 percent, and the Employment Index increased 4 percentage points to 48.6 percent. The Prices Index decreased 0.8 percentage point to 60.4 percent in February, indicating an increase in prices paid from January. According to the NMI, nine non-manufacturing industries reported growth in February. Respondents' comments vary by industry and company about business conditions."
INDUSTRY PERFORMANCE (Based on the NMI)
The nine industries reporting growth in February based on the NMI composite index — listed in order — are: Information; Arts, Entertainment & Recreation; Transportation & Warehousing; Public Administration; Professional, Scientific & Technical Services; Other Services; Retail Trade; Wholesale Trade; and Finance & Insurance. The eight industries reporting contraction in February — listed in order — are: Educational Services; Health Care & Social Assistance; Management of Companies & Support Services; Construction; Utilities; Accommodation & Food Services; Real Estate, Rental & Leasing; and Mining.
WHAT RESPONDENTS ARE SAYING ...
- "Conditions for our business have substantially improved over the last three months." (Information)
- "We are proceeding with caution based upon the current market conditions." (Public Administration)
- "Business activity about the same as last month. Perhaps a slight increase in new orders for material and services — nothing major." (Utilities)
- "The overall unemployment and the net effect of housing [instability] continue to affect our business." (Retail Trade)
- "Business is OK. Customers are doing a lot of price shopping." (Agriculture, Forestry, Fishing & Hunting)
|
ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* FEBRUARY 2010 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Manufacturing | Manufacturing | ||||||||
| Index |
Series Index Feb. |
Series Index Jan. |
Percent Point Change |
Direction |
Rate of Change |
Trend** (Months) |
Series Index Feb. |
Series Index Jan. |
Percent Point Change |
| NMI/PMI | 53.0 | 50.5 | +2.5 | Growing | Faster | 2 | 56.5 | 58.4 | -1.9 |
| Business Activity/Production | 54.8 | 52.2 | +2.6 | Growing | Faster | 3 | 58.4 | 66.2 | -7.8 |
| New Orders | 55.0 | 54.7 | +0.3 | Growing | Faster | 6 | 59.5 | 65.9 | -6.4 |
| Employment | 48.6 | 44.6 | +4.0 | Contracting | Slower | 26 | 56.1 | 53.3 | +2.8 |
| Supplier Deliveries | 53.5 | 50.5 | +3.0 | Slowing | Faster | 3 | 61.1 | 60.1 | +1.0 |
| Inventories | 45.0 | 46.5 | -1.5 | Contracting | Faster | 2 | 47.3 | 46.5 | +0.8 |
| Prices | 60.4 | 61.2 | -0.8 | Increasing | Slower | 7 | 67.0 | 70.0 | -3.0 |
| Backlog of Orders | 46.0 | 45.5 | +0.5 | Contracting | Slower | 4 | 61.0 | 56.0 | +5.0 |
| New Export Orders | 47.0 | 46.0 | +1.0 | Contracting | Slower | 3 | 56.5 | 58.5 | -2.0 |
| Imports | 48.5 | 47.0 | +1.5 | Contracting | Slower | 2 | 56.0 | 56.5 | -0.5 |
| Inventory Sentiment | 60.0 | 64.5 | -4.5 | Too High | Slower | 153 | N/A | N/A | N/A |
| Customers' Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 37.0 | 32.0 | +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, Supplier Deliveries and Inventories.
** Number of months moving in current direction
COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price
Airfare (2); Fuel* (2); Gasoline (4); Paper; Pharmaceuticals (2); Pharmacy Supplies (2); and Steel Products.
Commodities Down in Price
Beef; and Fuel*.
Commodities in Short Supply
No commodities are reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.
FEBRUARY 2010 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
In February, the NMI registered 53 percent, indicating growth 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.
NMI HISTORY
| Month | NMI | Month | NMI | |
|---|---|---|---|---|
| Feb 2010 | 53.0 | Aug 2009 | 48.2 | |
| Jan 2010 | 50.5 | Jul 2009 | 46.7 | |
| Dec 2009 | 49.8 | Jun 2009 | 46.3 | |
| Nov 2009 | 48.4 | May 2009 | 44.5 | |
| Oct 2009 | 50.1 | Apr 2009 | 43.9 | |
| Sep 2009 | 50.1 | Mar 2009 | 41.2 | |
|
Average for 12 months — 47.7 High — 53.0 Low — 41.2 |
||||
Business Activity
ISM's Non-Manufacturing Business Activity Index in February registered 54.8 percent, an increase of 2.6 percentage points when compared to the seasonally adjusted 52.2 percent registered in January. Four industries reported increased business activity, and 10 industries reported decreased activity for the month of February. Four industries reported no change from January. Comments from respondents include: "New projects for the year" and "More quoting and shipping."
The industries reporting growth of business activity in February are: Information; Finance & Insurance; Public Administration; and Professional, Scientific & Technical Services. The industries reporting decreased business activity in February — listed in order — are: Other Services; Management of Companies & Support Services; Construction; Educational Services; Wholesale Trade; Health Care & Social Assistance; Real Estate, Rental & Leasing; Transportation & Warehousing; Retail Trade; and Mining.
|
Business Activity |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 23 | 57 | 20 | 54.8 |
| Jan 2010 | 26 | 44 | 30 | 52.2 |
| Dec 2009 | 26 | 50 | 24 | 53.2 |
| Nov 2009 | 23 | 52 | 25 | 49.6 |
New Orders
ISM's Non-Manufacturing New Orders Index grew in February for the sixth consecutive month. The index registered 55 percent, which is an increase of 0.3 percentage point from the seasonally adjusted 54.7 percent reported in January. Comments from respondents include: "New customer program ramp up"; "Seeing an increase in business — our customers are feeling more optimistic"; and "Expansion by existing customers and new customers."
The seven industries reporting growth of new orders in February — listed in order — are: Information; Other Services; Public Administration; Professional, Scientific & Technical Services; Transportation & Warehousing; Accommodation & Food Services; and Wholesale Trade. The eight industries reporting contraction of new orders in February — listed in order — are: Health Care & Social Assistance; Management of Companies & Support Services; Construction; Educational Services; Finance & Insurance; Real Estate, Rental & Leasing; Retail Trade; and Mining.
|
New Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 23 | 59 | 18 | 55.0 |
| Jan 2010 | 26 | 49 | 25 | 54.7 |
| Dec 2009 | 22 | 55 | 23 | 52.0 |
| Nov 2009 | 26 | 56 | 18 | 53.7 |
Employment
Employment activity in the non-manufacturing sector contracted in February for the 26th consecutive month. ISM's Non-Manufacturing Employment Index for February registered 48.6 percent. This reflects an increase of 4 percentage points when compared to the seasonally adjusted 44.6 percent registered in January. Two industries reported increased employment, nine industries reported decreased employment, and seven industries reported unchanged employment compared to January. Comments from respondents include: "Some focused workforce reductions have taken place" and "Due to state budget issues, position vacancies are not being filled unless absolutely necessary."
The industries reporting an increase in employment in February are: Retail Trade; and Transportation & Warehousing. The industries reporting a reduction in employment in February — listed in order — are: Educational Services; Real Estate, Rental & Leasing; Mining; Accommodation & Food Services; Utilities; Health Care & Social Assistance; Information; Public Administration; and Wholesale Trade.
|
Employment |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 12 | 68 | 20 | 48.6 |
| Jan 2010 | 10 | 62 | 28 | 44.6 |
| Dec 2009 | 9 | 70 | 21 | 43.6 |
| Nov 2009 | 11 | 61 | 28 | 41.7 |
Supplier Deliveries
The Supplier Deliveries Index registered 53.5 percent in February, indicating supplier deliveries were slowing in February at a faster rate when compared to January. A reading above 50 percent indicates slower deliveries.
The seven industries reporting slower deliveries in February — listed in order — are: Arts, Entertainment & Recreation; Mining; Real Estate, Rental & Leasing; Other Services; Wholesale Trade; Transportation & Warehousing; and Accommodation & Food Services. The two industries reporting faster supplier deliveries in February are: Utilities and Retail Trade.
|
Supplier Deliveries |
% Slower |
% Same |
% Faster |
Index |
|---|---|---|---|---|
| Feb 2010 | 12 | 83 | 5 | 53.5 |
| Jan 2010 | 9 | 83 | 8 | 50.5 |
| Dec 2009 | 8 | 85 | 7 | 50.5 |
| Nov 2009 | 6 | 85 | 9 | 48.5 |
Inventories
ISM's Non-Manufacturing Inventories Index registered 45 percent in February, indicating that inventory levels contracted in February for the second consecutive month. Of the total respondents in February, 28 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Have reduced inventory levels since the holidays" and "Still burning inventory and the momentum is hard to stop."
The four industries reporting an increase in inventories in February are: Utilities; Information; Health Care & Social Assistance; and Wholesale Trade. The eight industries reporting decreases in inventories in February — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Professional, Scientific & Technical Services; Mining; Public Administration; Retail Trade; Management of Companies & Support Services; and Real Estate, Rental & Leasing.
|
Inventories |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 14 | 62 | 24 | 45.0 |
| Jan 2010 | 16 | 61 | 23 | 46.5 |
| Dec 2009 | 21 | 61 | 18 | 51.5 |
| Nov 2009 | 19 | 53 | 28 | 45.5 |
Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased in February. ISM's Non-Manufacturing Prices Index for February registered 60.4 percent, 0.8 percentage point lower than the seasonally adjusted 61.2 percent reported in January. In February, the percentage of respondents reporting higher prices is 21 percent, the percentage indicating no change in prices paid is 73 percent, and 6 percent of the respondents reported lower prices.
In February, nine industries reported an increase in prices paid, in the following order: Mining; Arts, Entertainment & Recreation; Wholesale Trade; Professional, Scientific & Technical Services; Utilities; Retail Trade; Finance & Insurance; Public Administration; and Health Care & Social Assistance. The two industries reporting prices as decreasing for the month of February are: Accommodation & Food Services; and Real Estate, Rental & Leasing.
|
Prices |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 21 | 73 | 6 | 60.4 |
| Jan 2010 | 27 | 64 | 9 | 61.2 |
| Dec 2009 | 19 | 73 | 8 | 59.6 |
| Nov 2009 | 21 | 69 | 10 | 57.1 |
Backlog of Orders
ISM's Non-Manufacturing Backlog of Orders Index contracted in February for the fourth consecutive month. The index registered 46 percent, 0.5 percentage point higher than the 45.5 percent reported in January. Of the total respondents in February, 50 percent indicated they do not measure backlog of orders.
The four industries reporting an increase in order backlogs in February are: Construction; Transportation & Warehousing; Accommodation & Food Services; and Professional, Scientific & Technical Services. The six industries reporting lower backlog of orders in February — listed in order — are: Educational Services; Other Services; Management of Companies & Support Services; Retail Trade; Utilities; and Mining.
|
Backlog of Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 10 | 72 | 18 | 46.0 |
| Jan 2010 | 13 | 65 | 22 | 45.5 |
| Dec 2009 | 13 | 70 | 17 | 48.0 |
| Nov 2009 | 16 | 65 | 19 | 48.5 |
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 February for the third consecutive month. The New Export Orders Index for February registered 47 percent, which is 1 percentage point higher than the 46 percent registered in January. Of the total respondents in February, 72 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 February are: Real Estate, Rental & Leasing; Information; and Mining. The four industries reporting a decrease in export orders in February are: Other Services; Educational Services; Wholesale Trade; and Retail Trade.
|
New Export Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 15 | 64 | 21 | 47.0 |
| Jan 2010 | 15 | 62 | 23 | 46.0 |
| Dec 2009 | 13 | 66 | 21 | 46.0 |
| Nov 2009 | 19 | 71 | 10 | 54.5 |
Imports
The ISM Non-Manufacturing Imports Index registered 48.5 percent, indicating contraction for the month of February. In the month of February, 63 percent of respondents reported that they do not use, or do not track, the use of imported materials.
The three industries reporting an increase in the use of imports in February are: Other Services; Information; and Retail Trade. The three industries reporting a decrease in imports for the month of February are: Educational Services; Arts, Entertainment & Recreation; and Mining.
|
Imports |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Feb 2010 | 11 | 75 | 14 | 48.5 |
| Jan 2010 | 11 | 72 | 17 | 47.0 |
| Dec 2009 | 17 | 71 | 12 | 52.5 |
| Nov 2009 | 5 | 82 | 13 | 46.0 |
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in February registered 60 percent. This is 4.5 percentage points lower than the 64.5 percent reported in January, indicating that respondents still believe their inventories are too high at this time. In February, 26 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 68 percent said their inventories were about right.
The 10 industries reporting a feeling that their inventories are too high in February — listed in order — are: Mining; Other Services; Management of Companies & Support Services; Health Care & Social Assistance; Wholesale Trade; Construction; Information; Professional, Scientific & Technical Services; Accommodation & Food Services; and Retail Trade. The only industry reporting that its inventory is too low in February is Transportation & Warehousing.
|
Inventory Sentiment |
%Too High |
%About Right |
%Too Low |
Index |
|---|---|---|---|---|
| Feb 2010 | 26 | 68 | 6 | 60.0 |
| Jan 2010 | 33 | 63 | 4 | 64.5 |
| Dec 2009 | 23 | 76 | 1 | 61.0 |
| Nov 2009 | 30 | 63 | 7 | 61.5 |
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 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 is published monthly by the Institute for Supply Management, the largest supply management research and education organization in the United States. ISM, established in 1915, is the largest supply management organization in the world as well as one of the most respected. Its mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education.
The next Non-Manufacturing ISM Report On Business, featuring the March 2010 data, will be released on Monday, April 5.
