EconoIndicators / Non-manufacturing Report on Business

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Non-manufacturing Report At a Glance
Index Readings Above 50 Represent Growth

NMI/PMI: 52.0
Change: Up 2.4
Business Activity/Production Index: 50.9
Change: Down 1.3
New Orders: 50.1
Change: Down 0.1
Employment: 50.8
Change: Up 3.9
Inventories: 47.0
Change: Down 4.5

Technorati Tags: service, non-manufacturing, economy

April 2008 Non-Manufacturing ISM Report On Business
NMI (Non-Manufacturing Index) at 52%
Business Activity Index at 50.9%
New Orders Index at 50.1%
Employment Index at 50.8%

(Tempe, Arizona) — Economic activity in the non-manufacturing sector expanded in April, 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; and senior vice president — supply management for Hilton Hotels Corporation. “The NMI (Non-Manufacturing Index) increased 2.4 percentage points to 52 percent, indicating expansion after three consecutive months of contraction within the non-manufacturing sector for April 2008. The Non-Manufacturing Business Activity Index decreased 1.3 percentage points to 50.9 percent. The New Orders Index decreased 0.1 percentage point to 50.1 percent, and the Employment Index increased 3.9 percentage points to 50.8 percent. The Prices Index increased 1.3 percentage points to 72.1 percent in April, indicating a faster rate in price increases than in March. According to the NMI, 12 non-manufacturing industries reported growth in April. Members’ comments in April continue to be mixed and vary by industry. The inflationary pressures of rising fuel, energy and commodity prices are of major concern for members.”
INDUSTRY PERFORMANCE (Based on the NMI)

The 12 industries reporting growth in April based on the new NMI composite index — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; Public Administration; Educational Services; Construction; Utilities; Retail Trade; and Information. The six industries reporting contraction in April are: Other Services*; Transportation & Warehousing; Finance & Insurance; Accommodation & Food Services; Health Care & Social Assistance; and Management of Companies & Support Services.
WHAT RESPONDENTS ARE SAYING …

* “The financial services sector continues to deal with global economic conditions that are impacting not only revenue and earnings, but also buying and sourcing strategies.” (Finance & Insurance)
* “There is a general push by many suppliers to increase prices (by as much as 5 percent to 10 percent) based upon the market pressures of fuels and energy.”(Health Care & Social Assistance)
* “Business levels and interest remain quite high; however, notice some price sensitivity in recent weeks.” (Professional, Scientific & Technical Services)
* “Paper market remains strong.” (Information)
* “First quarter has continued to be positive…” (Wholesale Trade)

ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS* APRIL 2008
	Non-Manufacturing						Manufacturing
Index	Series Index Apr.	Series Index Mar.	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Apr.	Series Index Mar.	Percent Point Change
NMI/PMI	52.0	49.6	+2.4	Growing	From Contracting	1	48.6	48.6	0.0
Business Activity/Production	50.9	52.2	-1.3	Growing	Slower	3	49.1	48.7	+0.4
New Orders	50.1	50.2	-0.1	Growing	Slower	2	46.5	46.5	0.0
Employment	50.8	46.9	+3.9	Growing	From Contracting	1	45.4	49.2	-3.8
Supplier Deliveries	56.0	49.0	+7.0	Slowing	From Faster	1	54.0	53.6	+0.4
Inventories	47.0	51.5	-4.5	Contracting	From Growing	1	48.1	44.9	+3.2
Prices	72.1	70.8	+1.3	Increasing	Faster	59	84.5	83.5	+1.0
Backlog of Orders	50.0	47.5	+2.5	Unchanged	From Contracting	1	51.5	47.5	+4.0
New Export Orders	48.5	55.0	-6.5	Contracting	From Growing	1	57.5	56.5	+1.0
Imports	50.0	54.5	-4.5	Unchanged	From Growing	1	48.0	45.0	+3.0
Inventory Sentiment	63.0	60.5	+2.5	"Too High"	Faster	131	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	45.0	51.0	-6.0

* 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

Airfares (2); Alcohol; Beef (2); Car Rentals; Carbon Steel Pipe (2); Carbon Steel Plate; Coffee; Copier Paper (3); Copper Wire (2); Corn; Diesel Fuel (7); Eggs (2); Flour; Foodstuffs; Fresh Dairy; Fuel (15); Gasoline (8); Hay; Hotel Costs; IT Support; Milk; Natural Gas; Oil (2); Paper (6); Paper Products (2); Petroleum (2); Plastic Bags (2); Printed Forms and Papers; Shipping Costs (2); Steel (2); Wheat; and Wood Shavings.

Commodities Down in Price

Cheese is the only commodity reported down in price.

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.

APRIL 2008 NON-MANUFACTURING INDEX SUMMARIES

NMI (Non-Manufacturing Index)

Beginning with the January 2008 Non-Manufacturing Report On Business®, 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. April’s NMI at 52 percent indicates growth in the non-manufacturing sector. 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 April are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; Public Administration; Educational Services; Construction; Utilities; Retail Trade; and Information. The industries reporting contraction in April are: Other Services*; Transportation & Warehousing; Finance & Insurance; Accommodation & Food Services; Health Care & Social Assistance; and Management of Companies & Support Services.

NMI HISTORY

Month	NMI
April 2008	52.0
March 2008	49.6
February 2008	49.3
January 2008	44.6

Business Activity

ISM’s Non-Manufacturing Business Activity Index in April registered 50.9 percent, indicating a decrease of 1.3 percentage points when compared to the 52.2 percent registered in March. Eight industries reported increased business activity, and five industries reported decreased activity for the month of April. Five industries reported no change from March. Comments from respondents include: "Increased customer demand"; "Ramping up for seasonal work"; and "More requests for services, especially training."

The industries reporting growth of business activity in April are: Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Public Administration; Wholesale Trade; Professional, Scientific & Technical Services; Educational Services; and Information. The industries reporting decreased business activity in April are: Other Services*; Accommodation & Food Services; Health Care & Social Assistance; Finance & Insurance; and Management of Companies & Support Services.

Business Activity	% Higher	% Same	% Lower	Index
April 2008	29	53	18	50.9
March 2008	30	50	20	52.2
February 2008	26	47	27	50.8
January 2008	18	40	42	41.9

THE LAST 12 MONTHS
Month	Business Activity Index	Month	Business Activity Index
Apr 2008	50.9	Oct 2007	55.5
Mar 2008	52.2	Sep 2007	55.7
Feb 2008	50.8	Aug 2007	56.3
Jan 2008	41.9	Jul 2007	55.9
Dec 2007	54.4	Jun 2007	59.7
Nov 2007	54.6	May 2007	58.4
Average for 12 months — 53.9 High — 59.7 Low — 41.9

New Orders

ISM’s Non-Manufacturing New Orders Index grew in April for the second consecutive month. The index decreased 0.1 percentage point to 50.1 percent from the 50.2 percent registered in March. Comments from respondents include: "Continued growth activity"; "Additional business with some key existing customers"; and "Increased demand."

Industries reporting growth of new orders in April are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Utilities; Public Administration; Professional, Scientific & Technical Services; Wholesale Trade; Educational Services; Construction; Health Care & Social Assistance; and Information. The industries reporting contraction of new orders in April are: Mining; Other Services*; Accommodation & Food Services; Management of Companies & Support Services; Transportation & Warehousing; and Finance & Insurance.

New Orders	% Higher	% Same	% Lower	Index
April 2008	26	57	17	50.1
March 2008	25	52	23	50.2
February 2008	24	50	26	49.6
January 2008	18	46	36	43.5

Employment

Employment activity in the non-manufacturing sector grew in April after three consecutive months of contraction. ISM’s Non-Manufacturing Employment Index for April registered 50.8 percent. This reflects an increase of 3.9 percentage points when compared to the 46.9 percent registered in March. Seven industries reported increased employment, five industries reported a decrease, and six industries indicated employment is unchanged from March. Comments from respondents include: "Adding new positions"; "Continued growth of business"; and "Revenues are down so we are not filling most vacant positions."

The industries reporting growth in employment in April are: Mining; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Professional, Scientific & Technical Services; Construction; and Public Administration. The industries reporting a reduction in employment in April are: Other Services*; Transportation & Warehousing; Health Care & Social Assistance; Finance & Insurance; and Wholesale Trade.

Employment	% Higher	% Same	% Lower	Index
April 2008	22	61	17	50.8
March 2008	14	66	20	46.9
February 2008	14	63	23	46.9
January 2008	6	70	24	43.9

Supplier Deliveries

Supplier deliveries were slower in April with the index registering 56 percent. A reading above 50 percent indicates slower deliveries.

The industries reporting slowing in supplier deliveries in April are: Other Services*; Professional, Scientific & Technical Services; Retail Trade; Wholesale Trade; Accommodation & Food Services; Health Care & Social Assistance; and Educational Services. The one industry reporting faster supplier deliveries in April is Management of Companies & Support Services.

Supplier Deliveries	% Slower	% Same	% Faster	Index
April 2008	17	78	5	56.0
March 2008	7	84	9	49.0
February 2008	7	86	7	50.0
January 2008	8	82	10	49.0

Inventories

ISM’s Non-Manufacturing Inventories Index registered 47 percent in April, indicating that inventory levels contracted in April when compared to March. Of the total respondents in April, 29 percent indicated they do not have inventories or do not measure them. Comments from members include: "Obsolete inventory reduction efforts"; "Conserving cash"; and "Reducing the number of SKU’s."

The industries reporting increases in inventories in April are: Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Utilities; Other Services*; Transportation & Warehousing; and Health Care & Social Assistance. The industries reporting decreases in inventories in April are: Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Educational Services; Wholesale Trade; Professional, Scientific & Technical Services; Information; and Finance & Insurance.

Inventories	% Higher	% Same	% Lower	Index
April 2008	17	60	23	47.0
March 2008	22	59	19	51.5
February 2008	24	52	24	50.0
January 2008	14	61	25	44.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in April for the 59th consecutive month. ISM’s Non-Manufacturing Prices Index for April registered 72.1 percent, 1.3 percentage points higher than March’s index of 70.8 percent. In April, the percentage of respondents reporting higher prices is 60 percent. The percentage indicating no change in prices paid is 38 percent. The percentage of respondents noting lower prices is at 2 percent.

In April, all 18 industries reported an increase in prices paid in the following order: Agriculture, Forestry, Fishing & Hunting; Mining; Real Estate, Rental & Leasing; Educational Services; Management of Companies & Support Services; Accommodation & Food Services; Other Services*; Wholesale Trade; Utilities; Arts, Entertainment & Recreation; Construction; Information; Professional, Scientific & Technical Services; Transportation & Warehousing; Finance & Insurance; Public Administration; Retail Trade; and Health Care & Social Assistance.

Prices	% Higher	% Same	% Lower	Index
April 2008	60	38	2	72.1
March 2008	53	45	2	70.8
February 2008	41	54	5	67.9
January 2008	41	54	5	70.7

Backlog of Orders

ISM’s Non-Manufacturing Backlog of Orders Index was unchanged at 50 percent in April after seven months of contraction. The index registered 2.5 percentage points higher than the 47.5 percent reported in March. Of the total respondents in April, 39 percent indicated they do not measure backlog of orders.

The industries reporting an increase in order backlogs in April are: Mining; Agriculture, Forestry, Fishing & Hunting; Educational Services; Accommodation & Food Services; Construction; Information; Finance & Insurance; and Public Administration. The industries reporting lower backlog of orders in April are: Management of Companies & Support Services; Retail Trade; Other Services*; Transportation & Warehousing; and Wholesale Trade.

Backlog of Orders	% Higher	% Same	% Lower	Index
April 2008	15	70	15	50.0
March 2008	14	67	19	47.5
February 2008	23	53	24	49.5
January 2008	13	66	21	46.0

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 indicated contraction for the month of April. The New Export Orders Index for April registered 48.5 percent, compared to March’s index of 55 percent. Of the total respondents in April, 68 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The industries reporting an increase in new export orders in April are: Arts, Entertainment & Recreation; Professional, Scientific & Technical Services; Finance & Insurance; and Wholesale Trade. The industries reporting a decrease in export orders in April are: Management of Companies & Support Services; Other Services*; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Public Administration; Retail Trade; and Accommodation & Food Services.

New Export Orders	% Higher	% Same	% Lower	Index
April 2008	18	61	21	48.5
March 2008	26	58	16	55.0
February 2008	16	61	23	46.5
January 2008	21	62	17	52.0

Imports

The ISM Non-Manufacturing Imports Index registered 50 percent in April. The index is 4.5 percentage points lower than March’s index of 54.5 percent. In April, 62 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The industries reporting an increase in the use of imports in April are: Arts, Entertainment & Recreation; Other Services*; Finance & Insurance; and Retail Trade. The industries reporting a decrease in imports for the month of April are: Public Administration; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; and Wholesale Trade.

Imports	% Higher	% Same	% Lower	Index
April 2008	16	68	16	50.0
March 2008	20	69	11	54.5
February 2008	18	62	20	49.0
January 2008	10	63	27	41.5

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index increased 2.5 percentage points to 63 percent in April. This indicates a general feeling among non-manufacturing purchasing and supply executives that inventory levels are too high and that the feeling is more widespread than in March. In April, 28 percent of respondents felt their inventories were too high, 2 percent indicated their inventories were too low, and 70 percent said that their inventories were about right.

The industries reporting a feeling that their inventories are too high in April are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Other Services*; Wholesale Trade; Retail Trade; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Finance & Insurance. The one industry reporting that their inventories are too low is Public Administration.