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U.S. July ISM Non-Manufacturing Report on Business (Text)

August 03, 2012

Following is the text of U.S. non-manufacturing conditions from the Institute for Supply Management.

Business Wire TEMPE, Ariz. -- August 03, 2012 Economic activity in the non-manufacturing sector grew in July for the 31st consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.

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 52.6 percent in July, 0.5 percentage point higher than the 52.1 percent registered in June. This indicates continued growth this month at a slighter faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 57.2 percent, which is 5.5 percentage points higher than the 51.7 percent reported in June, reflecting growth for the 36th consecutive month. The New Orders Index increased by 1 percentage point to 54.3 percent. The Employment Index decreased by 3 percentage points to 49.3 percent, indicating contraction in employment for the first time since December 2011. The Prices Index increased 6 percentage points to 54.9 percent, indicating higher month-over-month prices when compared to June. According to the NMI, 11 non-manufacturing industries reported growth in July. Respondents’ comments are mixed and vary by industry and company.”

INDUSTRY PERFORMANCE The 11 non-manufacturing industries reporting growth in July -- listed in order -- are: Accommodation & Food Services; Retail Trade; Utilities; Other Services; Educational Services; Arts, Entertainment & Recreation; Information; Real Estate, Rental & Leasing; Finance & Insurance; Public Administration; and Management of Companies & Support Services. The seven industries reporting contraction in July -- listed in order -- are: Mining; Agriculture, Forestry, Fishing & Hunting; Construction; Health Care & Social Assistance; Transportation & Warehousing; Wholesale Trade; and Professional, Scientific & Technical Services.

WHAT RESPONDENTS ARE SAYING … “The general economy and unemployment are keeping our business flat.” (Health Care & Social Assistance) “Beginning to see effects of slowing economy. New orders are down versus same time last year.” (Information) “Business is slowing; input costs are weakening.” (Agriculture, Forestry, Fishing & Hunting) “Seeing a slight uptick in sales revenue.” (Public Administration) “Things have not changed too much this past month; however, we are seeing more aggressive marketing/sales efforts by suppliers hungry for business.” (Transportation & Warehousing) “Overall, we are still seeing growth over last year, but the sequential growth has gone flat to negative.” (Wholesale Trade)

COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY

Commodities Up in Price Airfares (7); Beef; Carpet; Copier Paper; Dairy; Food & Beverage; Fuel(c); Gasoline(c) (7); Natural Gas(c); Polyethylene; and Textile Products. Commodities Down in Price #1 Diesel Fuel (3); #2 Diesel Fuel (3); Fuel(c) (2); Gasoline(c) (3); Natural Gas(c); Poly Film Products; PVC Products; and Steel Products (3).

Commodities in Short Supply Computer Servers 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.

JULY 2012 NON-MANUFACTURING INDEX SUMMARIES NMI In July, the NMI registered 52.6 percent, indicating continued growth in the non-manufacturing sector for the 31st 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 July registered 57.2 percent, 5.5 percentage points higher than the 51.7 percent registered in June. Twelve industries reported increased business activity, and four industries reported decreased activity for the month of July. Comments from respondents include: “Business conditions show growth” and “Growth of new business segments.” The industries reporting growth of business activity in July -- listed in order -- are: Accommodation & Food Services; Utilities; Arts, Entertainment & Recreation; Retail Trade; Educational Services; Finance & Insurance; Management of Companies & Support Services; Real Estate, Rental & Leasing; Information; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The industries reporting decreased business activity in July are: Agriculture, Forestry, Fishing & Hunting; Mining; Construction; and Wholesale Trade.

New Orders ISM’s Non-Manufacturing New Orders Index grew in July for the 36th consecutive month. The index registered 54.3 percent, an increase of 1 percentage point from the 53.3 percent reported in June. Comments from respondents include: “More inquiries regarding our services” and “Addition of several business units and new service lines.” The 10 industries reporting growth of new orders in July -- listed in order -- are: Retail Trade; Accommodation & Food Services; Educational Services; Utilities; Real Estate, Rental & Leasing; Other Services; Information; Management of Companies & Support Services; Finance & Insurance; and Health Care & Social Assistance.

The five industries reporting contraction of new orders in July are: Mining; Wholesale Trade; Construction; Professional, Scientific & Technical Services; and Public Administration.

Employment Employment activity in the non-manufacturing sector contracted in July, as ISM’s Non-Manufacturing Employment Index registered 49.3 percent. This reflects a decrease of 3 percentage points when compared to the 52.3 percent registered in June. This also represents the first month of contraction since December 2011, when the index registered 49.8 percent. Nine industries reported increased employment, six industries reported decreased employment, and three industries reported unchanged employment compared to June. Comments from respondents include: “Experiencing a non-growth environment; need fewer people” and “Due to business growth, more positions to be filled; held a hiring event.”

The industries reporting an increase in employment in July -- listed in order -- are: Other Services; Accommodation & Food Services; Arts, Entertainment & Recreation; Utilities; Wholesale Trade; Public Administration; Information; Professional, Scientific & Technical Services; and Retail Trade. The industries reporting a reduction in employment in July -- listed in order -- are: Mining; Educational Services; Construction; Health Care & Social Assistance; Management of Companies & Support Services; and Transportation & Warehousing.

Supplier Deliveries The Supplier Deliveries Index registered 49.5 percent in July, 1.5 percentage points lower than the 51 percent registered in June, indicating that supplier deliveries were faster in July. A reading above 50 percent indicates slower deliveries, and below 50 percent indicates faster deliveries.

The five industries reporting slower deliveries in July are: Educational Services; Accommodation & Food Services; Other Services; Retail Trade; and Information. The eight industries reporting faster supplier deliveries in July -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Mining; Health Care & Social Assistance; Management of Companies & Support Services; Finance & Insurance; Transportation & Warehousing; Professional, Scientific & Technical Services; and Construction.

Inventories ISM’s Non-Manufacturing Inventories Index grew in July for the sixth consecutive month. The index registered 54.5 percent, which is 1.5 percentage points higher than the 53 percent reported in June. Of the total respondents in June, 27 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Building inventories to desired levels” and “Support for newly gained contracts.” The 11 industries reporting an increase in inventories in July -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Mining; Other Services; Utilities; Accommodation & Food Services; Arts, Entertainment & Recreation; Wholesale Trade; Transportation & Warehousing; Construction; and Management of Companies & Support Services. The four industries reporting decreases in inventories in July are: Professional, Scientific & Technical Services; Public Administration; Information; and Health Care & Social Assistance.

Prices Prices paid by non-manufacturing organizations for purchased materials and services increased in July following two consecutive months of contraction. ISM’s Non-Manufacturing Prices Index for July registered 54.9 percent, 6 percentage points higher than the 48.9 percent reported in June. In July, the percentage of respondents reporting higher prices is 19 percent, the percentage indicating no change in prices paid is 71 percent, and 10 percent of the respondents reported lower prices.

Ten non-manufacturing industries reported an increase in prices paid during the month of July, in the following order: Educational Services; Other Services; Retail Trade; Management of Companies & Support Services; Arts, Entertainment & Recreation; Wholesale Trade; Health Care & Social Assistance; Transportation & Warehousing; Finance & Insurance; and Professional, Scientific & Technical Services. The six industries reporting a decrease in prices paid during July -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Mining; Construction; Public Administration; Information; and Utilities.

Backlog of Orders ISM’s Non-Manufacturing Backlog of Orders Index contracted in July for the second consecutive month following two months of growth. The index registered 44.5 percent, which is 3 percentage points lower than the 47.5 percent reported in June. Of the total respondents in June, 42 percent indicated they do not measure backlog of orders.

The three industries reporting an increase in order backlogs in July are: Arts, Entertainment & Recreation; Construction; and Finance & Insurance. The nine industries reporting lower backlog of orders in July -- listed in order -- are: Mining; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Utilities; Wholesale Trade; Public Administration; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Transportation & Warehousing.

Six industries reported no change in backlog of orders in July compared to June.

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 July following one month of contraction. The New Export Orders Index for July registered 51 percent, which is 1.5 percentage points higher than the 49.5 percent reported in June. Of the total respondents in June, 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 July are: Other Services; Retail Trade; Public Administration; Transportation & Warehousing; and Professional, Scientific & Technical Services. The five industries reporting a decrease in export orders in July are: Mining; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Wholesale Trade; and Construction. Six industries reported no change in new export orders in July compared to June.

Imports The ISM Non-Manufacturing Imports Index contracted in July after seven consecutive months of growth. The index registered 44.5 percent, which is 9 percentage points lower than the 53.5 percent reported in June. This is the lowest reading registered by the index since March 2009, when the index registered 37 percent. Fifty-eight 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 July are: Arts, Entertainment & Recreation; and Retail Trade. The five industries reporting a decrease in imports for the month of July are: Information; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Professional, Scientific & Technical Services; and Accommodation & Food Services. Ten industries reported no change in imports for the month of July compared to June.

Inventory Sentiment The ISM Non-Manufacturing Inventory Sentiment Index in July registered 59 percent, which is 5.5 percentage points lower than the 64.5 percent reported in June. This indicates that respondents believe their inventories are still too high at this time. In July, 20 percent of respondents said their inventories were too high, 2 percent said their inventories were too low, and 78 percent said their inventories were about right.

The 11 industries reporting a feeling that their inventories are too high in July -- listed in order -- are: Mining; Real Estate, Rental & Leasing; Wholesale Trade; Finance & Insurance; Transportation & Warehousing; Arts, Entertainment & Recreation; Utilities; Professional, Scientific & Technical Services; Retail Trade; Public Administration; and Health Care & Social Assistance.

The only industry reporting that their inventories are too low in July is Information.

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 first supply institute in the world. Founded in 1915, ISM exists to lead and serve the supply management profession and is a highly influential and respected association in the global marketplace. 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 August 2012 data will be released at 10:00 a.m. (ET) on Thursday, September 6, 2012. /

SOURCE: Institute for Supply Management http://www.ism.ws


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