INDUSTRY PERFORMANCE (Based on the NMI)
The 11 industries reporting growth in October based on the NMI composite index — listed in order — are: Educational Services; Mining; Professional, Scientific & Technical Services; Information; Finance & Insurance; Wholesale Trade; Health Care & Social Assistance; Accommodation & Food Services; Management of Companies & Support Services; Retail Trade; and Public Administration. The three industries reporting contraction in October are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; and Construction.
WHAT RESPONDENTS ARE SAYING …
- “Sales are still down compared to last year, but showing a slight increase.” (Public Administration)
- “Economy still slow for our industry, with very small signs of recovery. Strong downward pricing pressures from customers affecting business.” (Professional, Scientific & Technical Services)
- “Some positive growth in comp [comparable] sales over the past 2 to 3 months.” (Accommodation & Food Services)
- “Business is picking up ever so slowly, but improving.” (Transportation & Warehousing)
- “Generally stable-to-improving demand for our products.” (Wholesale Trade)
(a) 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.
(b) Number of months moving in current direction
COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price
Airline Tickets; Beef; Cable and Cable Products; Coated Freesheet; Computer Accessories; Copper (2); Cotton Products (2); Dairy; #1 Diesel Fuel; #2 Diesel Fuel (4); Fuel (10); Gasoline; Lumber Products; Pork; and Rebar.
Commodities Down in Price
Consulting Services; and Shingles.
Commodities in Short Supply
Coated Groundwood (4); and Telephone Components.
Note: The number of consecutive months the commodity is listed is indicated after each item.
OCTOBER 2010 NON-MANUFACTURING INDEX SUMMARIES
NMI (Non-Manufacturing Index)
In October, the NMI registered 54.3 percent, indicating continued growth in the non-manufacturing sector for the 10th 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 October registered 58.4 percent, an increase of 5.6 percentage points when compared to the 52.8 percent registered in September. Ten industries reported increased business activity, and three industries reported decreased activity for the month of October. Five industries reported no change from September. Comments from respondents include: “Continued strength in core businesses and capital expenditures for balance of 2010” and “Increase in service calls/requests for service.”
The industries reporting growth of business activity in October — listed in order — are: Finance & Insurance; Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Accommodation & Food Services; Other Services; Wholesale Trade; Information; Public Administration; and Retail Trade. The industries reporting decreased business activity in October are: Agriculture, Forestry, Fishing & Hunting; Construction; and Mining.
New Orders
ISM’s Non-Manufacturing New Orders Index grew in October for the 14th consecutive month. The index registered 56.7 percent, which is an increase of 1.8 percentage points from the 54.9 percent reported in September. Comments from respondents include: “Orders awarded that have been on customer hold” and “New projects approved.”
The 10 industries reporting growth of new orders in October — listed in order — are: Professional, Scientific & Technical Services; Mining; Educational Services; Finance & Insurance; Transportation & Warehousing; Accommodation & Food Services; Retail Trade; Information; Wholesale Trade; and Public Administration. The three industries reporting contraction of new orders in October are: Other Services; Construction; and Health Care & Social Assistance.
Employment
Employment activity in the non-manufacturing sector grew in October, as ISM’s Non-Manufacturing Employment Index registered 50.9 percent. This reflects an increase of 0.7 percentage point when compared to the 50.2 percent registered in September. Seven industries reported increased employment, eight industries reported decreased employment, and three industries reported unchanged employment compared to September. Comments from respondents include: “Continue moderate hire increases of hourly workers per business increases” and “Slight lessening of hiring restrictions due to improved economic climate.”
The industries reporting an increase in employment in October — listed in order — are: Mining; Information; Management of Companies & Support Services; Health Care & Social Assistance; Retail Trade; Educational Services; and Public Administration. The industries reporting a reduction in employment in October — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Accommodation & Food Services; Transportation & Warehousing; Construction; Wholesale Trade; and Professional, Scientific & Technical Services.
Supplier Deliveries
The Supplier Deliveries Index registered 51 percent in October, 4 percentage points lower than the 55 percent registered in September, indicating that supplier deliveries continued to slow in October. A reading above 50 percent indicates slower deliveries.
The seven industries reporting slower deliveries in October — listed in order — are: Construction; Wholesale Trade; Educational Services; Accommodation & Food Services; Retail Trade; Information; and Professional, Scientific & Technical Services. The three industries reporting faster supplier deliveries in October are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; and Public Administration.
Inventories
ISM’s Non-Manufacturing Inventories Index registered 47.5 percent in October, indicating that inventory levels contracted in October for the second consecutive month. Of the total respondents in October, 32 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Continuing to manage down inventories” and “Better materials management processes.”
The seven industries reporting an increase in inventories in October — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Wholesale Trade; Retail Trade; Public Administration; Professional, Scientific & Technical Services; and Accommodation & Food Services. The seven industries reporting decreases in inventories in October — listed in order — are: Arts, Entertainment & Recreation; Construction; Information; Management of Companies & Support Services; Transportation & Warehousing; Health Care & Social Assistance; and Finance & Insurance.
Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased in October at a significantly faster rate than in September. ISM’s Non-Manufacturing Prices Index for October registered 68.3 percent, 8.2 percentage points higher than the 60.1 percent reported in September. In October, the percentage of respondents reporting higher prices is 32 percent, the percentage indicating no change in prices paid is 65 percent, and 3 percent of the respondents reported lower prices.
In October, 13 industries reported an increase in prices paid, in the following order: Wholesale Trade; Arts, Entertainment & Recreation; Accommodation & Food Services; Information; Mining; Construction; Educational Services; Utilities; Transportation & Warehousing; Finance & Insurance; Public Administration; Retail Trade; and Professional, Scientific & Technical Services. No industry reported prices as decreasing for the month of October. Five industries reported no change in prices for the month of October.
Backlog of Orders
ISM’s Non-Manufacturing Backlog of Orders Index grew in October after one month of contraction. The index registered 52 percent, 4 percentage points higher than the 48 percent reported in September. Of the total respondents in October, 40 percent indicated they do not measure backlog of orders.
The seven industries reporting an increase in order backlogs in October — listed in order — are: Real Estate, Rental & Leasing; Mining; Utilities; Retail Trade; Accommodation & Food Services; Wholesale Trade; and Public Administration. The three industries reporting lower backlog of orders in October are: Agriculture, Forestry, Fishing & Hunting; Construction; and Health Care & Social Assistance.
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 at a slower rate in October. The New Export Orders Index for October registered 55.5 percent, which is 2.5 percentage points lower than the 58 percent registered in September. Of the total respondents in October, 67 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 October are: Construction; Retail Trade; Transportation & Warehousing; Accommodation & Food Services; and Professional, Scientific & Technical Services. The two industries reporting a decrease in export orders in October are: Mining and Other Services. Eight industries reported no change in new export orders for the month of October.
Imports
The ISM Non-Manufacturing Imports Index grew in October for the third consecutive month. The index registered 54 percent, which is 1 percentage point higher than the 53 percent reported in September. In October, 59 percent of respondents reported that they do not use, or do not track, the use of imported materials.
The six industries reporting an increase in the use of imports in October — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Other Services; Retail Trade; Accommodation & Food Services; and Wholesale Trade. The only industry reporting a decrease in imports for the month of October is Arts, Entertainment & Recreation. Ten industries reported no change in imports for the month of October.
Inventory Sentiment
The ISM Non-Manufacturing Inventory Sentiment Index in October registered 61.5 percent, which is 2 percentage points higher than the 59.5 percent reported in September. This indicates that respondents believe their inventories are too high at this time. In October, 28 percent of respondents said their inventories were too high, 5 percent said their inventories were too low, and 67 percent said their inventories were about right.
The nine industries reporting a feeling that their inventories are too high in October — listed in order — are: Transportation & Warehousing; Real Estate, Rental & Leasing; Other Services; Professional, Scientific & Technical Services; Wholesale Trade; Retail Trade; Finance & Insurance; Accommodation & Food Services; and Health Care & Social Assistance. The two industries reporting that their inventories are too low in October are: Management of Companies & Support Services; and Construction.
