Economic activity in the United States non-manufacturing sector grew in March for the third 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 April 5 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 55.4 percent in March, 2.4 percentage points higher than the seasonally adjusted 53 percent registered in February, and indicating growth in the non-manufacturing sector," said Nieves. "The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 60 percent, reflecting growth for the fourth consecutive month. The New Orders Index increased 7.3 percentage points to 62.3 percent, and the Employment Index increased 1.2 percentage points to 49.8 percent. The Prices Index increased 2.5 percentage points to 62.9 percent in March, indicating an increase in prices paid from February. According to the NMI, 14 non-manufacturing industries reported growth in March. Respondents' comments are mostly positive about business conditions and the direction of the economy."
INDUSTRY PERFORMANCE (Based on the NMI)
The 14 industries reporting growth in March based on the NMI composite index — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Information; Management of Companies & Support Services; Retail Trade; Other Services; Accommodation & Food Services; Finance & Insurance; Wholesale Trade; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The two industries reporting contraction in March are: Real Estate, Rental & Leasing; and Educational Services.
WHAT RESPONDENTS ARE SAYING ...
- "Business conditions have returned to normal (pre-recession). Our business is up significantly since 2009. We are very positive about the upcoming year." (Information)
- "Demand for loans, credit cards, mortgages and equity lending is expected to continue to increase." (Finance & Insurance)
- "Brisk business activity continues as more projects get 'green light.'" (Utilities)
- "Observing some relaxation on several fronts regarding spending and hiring. Still very cautious, but making investments where they make sense." (Retail Trade)
- "Limited funding available for development [and] expansions." (Accommodation & Food Services)
- "The economy appears to be holding its own; however, state and local funding is projected to decrease next fiscal year." (Educational Services)
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ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* MARCH 2010 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-Manufacturing | Manufacturing | ||||||||
| Index |
Series Index Mar. |
Series Index Feb. |
Percent Point Change |
Direction |
Rate of Change |
Trend** (Months) |
Series Index Mar. |
Series Index Feb. |
Percent Point Change |
| NMI/PMI | 55.4 | 53.0 | +2.4 | Growing | Faster | 3 | 59.6 | 56.5 | +3.1 |
| Business Activity/Production | 60.0 | 54.8 | +5.2 | Growing | Faster | 4 | 61.1 | 58.4 | +2.7 |
| New Orders | 62.3 | 55.0 | +7.3 | Growing | Faster | 7 | 61.5 | 59.5 | +2.0 |
| Employment | 49.8 | 48.6 | +1.2 | Contracting | Slower | 27 | 55.1 | 56.1 | -1.0 |
| Supplier Deliveries | 49.5 | 53.5 | -4.0 | Faster | From Slowing | 1 | 64.9 | 61.1 | +3.8 |
| Inventories | 46.5 | 45.0 | +1.5 | Contracting | Slower | 3 | 55.3 | 47.3 | +8.0 |
| Prices | 62.9 | 60.4 | +2.5 | Increasing | Faster | 8 | 75.0 | 67.0 | +8.0 |
| Backlog of Orders | 55.5 | 46.0 | +9.5 | Growing | From Contracting | 1 | 58.0 | 61.0 | -3.0 |
| New Export Orders | 57.5 | 47.0 | +10.5 | Growing | From Contracting | 1 | 61.5 | 56.5 | +5.0 |
| Imports | 51.0 | 48.5 | +2.5 | Growing | From Contracting | 1 | 57.0 | 56.0 | +1.0 |
| Inventory Sentiment | 52.5 | 60.0 | -7.5 | Too High | Slower | 154 | N/A | N/A | N/A |
| Customers' Inventories | N/A | N/A | N/A | N/A | N/A | N/A | 39.0 | 37.0 | +2.0 |
* 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 (3); Cartons; Copper Fittings; Copper Products; Corrugated Products; #1 Diesel Fuel; #2 Diesel Fuel; Drywall/Gypsum Board; Fuel (3); Gasoline (5); Medical Supplies; Metal Studs; Paper (2); Paper Products; Plastic Bags; Plastic Film; Plastic Resin Products; Produce; Red Bell Peppers; Roofing Shingles; Steel Pipe and Fittings; Steel Products (2); and Tomatoes.
Commodities Down in Price
Beef (2); and Construction Labor.
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.
MARCH 2010 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
In March, the NMI registered 55.4 percent, indicating growth in the non-manufacturing sector for the third 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 | |
|---|---|---|---|---|
| Mar 2010 | 55.4 | Sep 2009 | 50.1 | |
| 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 | |
|
Average for 12 months — 48.9 High — 55.4 Low — 43.9 |
||||
Business Activity
ISM's Non-Manufacturing Business Activity Index in March registered 60 percent, an increase of 5.2 percentage points when compared to the seasonally adjusted 54.8 percent registered in February. Thirteen industries reported increased business activity, and three industries reported decreased activity for the month of March. Two industries reported no change from February. Comments from respondents include: "Seeing an increase in business. Our customers are feeling more optimistic"; and "New year budgets, as well as replacing inventories depleted during 2009."
The industries reporting growth of business activity in March — listed in order — are: Utilities; Information; Mining; Retail Trade; Construction; Finance & Insurance; Management of Companies & Support Services; Wholesale Trade; Accommodation & Food Services; Other Services; Professional, Scientific & Technical Services; Public Administration; and Health Care & Social Assistance. The three industries reporting decreased business activity in March are: Real Estate, Rental & Leasing; Educational Services; and Transportation & Warehousing.
|
Business Activity |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 37 | 50 | 13 | 60.0 |
| Feb 2010 | 23 | 57 | 20 | 54.8 |
| Jan 2010 | 26 | 44 | 30 | 52.2 |
| Dec 2009 | 26 | 50 | 24 | 53.2 |
New Orders
ISM's Non-Manufacturing New Orders Index grew in March for the seventh consecutive month. The index registered 62.3 percent, which is an increase of 7.3 percentage points from the seasonally adjusted 55 percent reported in February. Comments from respondents include: "Improving sales trend; capital money flowing with the start of a new year"; "More bids; work starting"; and "Prime selling month."
The 14 industries reporting growth of new orders in March — listed in order — are: Management of Companies & Support Services; Utilities; Information; Mining; Accommodation & Food Services; Retail Trade; Construction; Other Services; Health Care & Social Assistance; Transportation & Warehousing; Public Administration; Wholesale Trade; Finance & Insurance; and Educational Services. The only industry reporting contraction of new orders in March is Real Estate, Rental & Leasing.
|
New Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 37 | 49 | 14 | 62.3 |
| Feb 2010 | 23 | 59 | 18 | 55.0 |
| Jan 2010 | 26 | 49 | 25 | 54.7 |
| Dec 2009 | 22 | 55 | 23 | 52.0 |
Employment
Employment activity in the non-manufacturing sector contracted in March for the 27th consecutive month. ISM's Non-Manufacturing Employment Index for March registered 49.8 percent. This reflects an increase of 1.2 percentage points when compared to the seasonally adjusted 48.6 percent registered in February. Six industries reported increased employment, eight industries reported decreased employment, and four industries reported unchanged employment compared to February. Comments from respondents include: "We are staffing to volume" and "Jobs are not being filled pending budget issues."
The industries reporting an increase in employment in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Construction; Retail Trade; Information; and Finance & Insurance. The industries reporting a reduction in employment in March — listed in order — are: Real Estate, Rental & Leasing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Transportation & Warehousing; Public Administration; Educational Services; Wholesale Trade; and Management of Companies & Support Services.
|
Employment |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 16 | 65 | 19 | 49.8 |
| Feb 2010 | 12 | 68 | 20 | 48.6 |
| Jan 2010 | 10 | 62 | 28 | 44.6 |
| Dec 2009 | 9 | 70 | 21 | 43.6 |
Supplier Deliveries
The Supplier Deliveries Index registered 49.5 percent in March, indicating supplier deliveries were faster in March when compared to February. A reading above 50 percent indicates slower deliveries.
The five industries reporting slower deliveries in March are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Wholesale Trade; and Transportation & Warehousing. The four industries reporting faster supplier deliveries in March are: Information; Utilities; Retail Trade; and Finance & Insurance.
|
Supplier Deliveries |
% Slower |
% Same |
% Faster |
Index |
|---|---|---|---|---|
| Mar 2010 | 8 | 83 | 9 | 49.5 |
| Feb 2010 | 12 | 83 | 5 | 53.5 |
| Jan 2010 | 9 | 83 | 8 | 50.5 |
| Dec 2009 | 8 | 85 | 7 | 50.5 |
Inventories
ISM's Non-Manufacturing Inventories Index registered 46.5 percent in March, indicating that inventory levels contracted in March for the third consecutive month. Of the total respondents in March, 31 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Continued improvement in inventory turns" and "Inventory drawdown."
The five industries reporting an increase in inventories in March are: Other Services; Agriculture, Forestry, Fishing & Hunting; Utilities; Wholesale Trade; and Information. The nine industries reporting decreases in inventories in March — listed in order — are: Transportation & Warehousing; Retail Trade; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Management of Companies & Support Services; Public Administration; Finance & Insurance; Accommodation & Food Services; and Health Care & Social Assistance.
|
Inventories |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 21 | 51 | 28 | 46.5 |
| Feb 2010 | 14 | 62 | 24 | 45.0 |
| Jan 2010 | 16 | 61 | 23 | 46.5 |
| Dec 2009 | 21 | 61 | 18 | 51.5 |
Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased in March. ISM's Non-Manufacturing Prices Index for March registered 62.9 percent, 2.5 percentage points higher than the seasonally adjusted 60.4 percent reported in February. In March, the percentage of respondents reporting higher prices is 32 percent, the percentage indicating no change in prices paid is 63 percent, and 5 percent of the respondents reported lower prices.
In March, 14 industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Construction; Mining; Wholesale Trade; Management of Companies & Support Services; Educational Services; Finance & Insurance; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Public Administration; Retail Trade; and Accommodation & Food Services. The only industry reporting prices as decreasing for the month of March is Information.
|
Prices |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 32 | 63 | 5 | 62.9 |
| Feb 2010 | 21 | 73 | 6 | 60.4 |
| Jan 2010 | 27 | 64 | 9 | 61.2 |
| Dec 2009 | 19 | 73 | 8 | 59.6 |
Backlog of Orders
ISM's Non-Manufacturing Backlog of Orders Index grew in March for the first time after four consecutive months of contraction. The index registered 55.5 percent, 9.5 percentage points higher than the 46 percent reported in February. Of the total respondents in March, 47 percent indicated they do not measure backlog of orders.
The eight industries reporting an increase in order backlogs in March — listed in order — are: Real Estate, Rental & Leasing; Construction; Utilities; Other Services; Accommodation & Food Services; Wholesale Trade; Finance & Insurance; and Professional, Scientific & Technical Services. The only industry reporting lower backlog of orders in March is Public Administration.
|
Backlog of Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 22 | 67 | 11 | 55.5 |
| Feb 2010 | 10 | 72 | 18 | 46.0 |
| Jan 2010 | 13 | 65 | 22 | 45.5 |
| Dec 2009 | 13 | 70 | 17 | 48.0 |
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 March after contracting for three consecutive months. The New Export Orders Index for March registered 57.5 percent, which is 10.5 percentage points higher than the 47 percent registered in February. Of the total respondents in March, 72 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 March are: Transportation & Warehousing; Information; Accommodation & Food Services; Wholesale Trade; and Retail Trade. The only industry reporting a decrease in export orders in March is Professional, Scientific & Technical Services.
|
New Export Orders |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 21 | 73 | 6 | 57.5 |
| Feb 2010 | 15 | 64 | 21 | 47.0 |
| Jan 2010 | 15 | 62 | 23 | 46.0 |
| Dec 2009 | 13 | 66 | 21 | 46.0 |
Imports
The ISM Non-Manufacturing Imports Index registered 51 percent, indicating growth for the month of March after two consecutive months of contraction. In the month of March, 62 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 March are: Information; Mining; and Accommodation & Food Services. The three industries reporting a decrease in imports for the month of March are: Construction; Transportation & Warehousing; and Retail Trade.
|
Imports |
% Higher |
% Same |
% Lower |
Index |
|---|---|---|---|---|
| Mar 2010 | 11 | 80 | 9 | 51.0 |
| Feb 2010 | 11 | 75 | 14 | 48.5 |
| Jan 2010 | 11 | 72 | 17 | 47.0 |
| Dec 2009 | 17 | 71 | 12 | 52.5 |
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in March registered 52.5 percent. This is 7.5 percentage points lower than the 60 percent reported in February, indicating that respondents believe their inventories are slightly high at this time. In March, 20 percent of respondents said their inventories were too high, 15 percent said their inventories were too low, and 65 percent said their inventories were about right.
The five industries reporting a feeling that their inventories are too high in March are: Other Services; Utilities; Transportation & Warehousing; Accommodation & Food Services; and Health Care & Social Assistance. The three industries reporting that inventories are too low in March are: Management of Companies & Support Services; Retail Trade; and Public Administration.
|
Inventory Sentiment |
%Too High |
%About Right |
%Too Low |
Index |
|---|---|---|---|---|
| Mar 2010 | 20 | 65 | 15 | 52.5 |
| Feb 2010 | 26 | 68 | 6 | 60.0 |
| Jan 2010 | 33 | 63 | 4 | 64.5 |
| Dec 2009 | 23 | 76 | 1 | 61.0 |
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 April 2010 data, will be released at 10 a.m. (ET) on Wednesday, May 5.
