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April Non-Manufacturing ISM Report On Business®

Posted by Heidi Schwartz

Economic activity in the non-manufacturing sector grew in April for the 40th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®The report was issued by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee.

In April, the NMI registered 53.1 percent, indicating continued growth in the non-manufacturing sector for the 40th 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
Apr 2013 53.1 Oct 2012 54.8
Mar 2013 54.4 Sep 2012 55.2
Feb 2013 56.0 Aug 2012 54.3
Jan 2013 55.2 Jul 2012 52.9
Dec 2012 55.7 Jun 2012 52.7
Nov 2012 54.8 May 2012 54.1
Average for 12 months – 54.4High – 56.0Low – 52.7

Business Activity

In April, 12 industries reported increased business activity and four industries reported decreased activity for the month. Comments from respondents include: “Increased customer base” and “Improved economic environment.”

The industries reporting growth of business activity in April — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Arts, Entertainment & Recreation; Utilities; Retail Trade; Construction; Real Estate, Rental & Leasing; Management of Companies & Support Services; Information; Professional, Scientific & Technical Services; Wholesale Trade; and Public Administration. The industries reporting decreased business activity in April are: Educational Services; Other Services; Health Care & Social Assistance; and Agriculture, Forestry, Fishing & Hunting.

Business Activity %Higher %Same %Lower Index
Apr 2013 33 52 15 55.0
Mar 2013 36 51 13 56.5
Feb 2013 32 50 18 56.9
Jan 2013 31 44 25 56.4

New Orders

ISM’s Non-Manufacturing New Orders Index grew in April for the 45th consecutive month. The index registered 54.5 percent, a decrease of 0.1 percentage point from the 54.6 percent reported in March. Comments from respondents include: “Implementation of new projects” and “New product placements.”

The 13 industries reporting growth of new orders in April — listed in order — are: Transportation & Warehousing; Accommodation & Food Services; Construction; Retail Trade; Real Estate, Rental & Leasing; Information; Management of Companies & Support Services; Arts, Entertainment & Recreation; Utilities; Finance & Insurance; Wholesale Trade; Professional, Scientific & Technical Services; and Public Administration. The five industries reporting contraction of new orders in April are: Mining; Educational Services; Other Services; Health Care & Social Assistance; and Agriculture, Forestry, Fishing & Hunting.

New Orders %Higher %Same %Lower Index
Apr 2013 30 56 14 54.5
Mar 2013 31 57 12 54.6
Feb 2013 31 56 13 58.2
Jan 2013 28 51 21 54.4

Employment

Employment activity in the non-manufacturing sector grew in April for the ninth consecutive month. ISM’s Non-Manufacturing Employment Index registered 52 percent, which reflects a decrease of 1.3 percentage points when compared to the 53.3 percent registered in March. Ten industries reported increased employment, and six industries reported decreased employment. Comments from respondents include: “Increasing work-force levels” and “Right-sizing the operations to the economy right now.”

The industries reporting an increase in employment in April — listed in order — are: Retail Trade; Management of Companies & Support Services; Construction; Transportation & Warehousing; Wholesale Trade; Information; Public Administration; Accommodation & Food Services; Health Care & Social Assistance; and Finance & Insurance. The industries reporting a reduction in employment in April — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Utilities; Professional, Scientific & Technical Services; and Arts, Entertainment & Recreation.

Employment %Higher %Same %Lower Index
Apr 2013 28 57 15 52.0
Mar 2013 26 58 16 53.3
Feb 2013 26 61 13 57.2
Jan 2013 20 64 16 57.5

Supplier Deliveries

The Supplier Deliveries Index registered 51 percent in April, indicating that supplier deliveries were slower in April for the fourth consecutive month. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries.

The five industries reporting slower deliveries in April are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Transportation & Warehousing. The three industries reporting faster supplier deliveries in April are: Mining; Information; and Finance & Insurance. Ten industries reported no change in supplier deliveries in April compared to March.

Supplier Deliveries %Slower %Same %Faster Index
Apr 2013 7 88 5 51.0
Mar 2013 9 88 3 53.0
Feb 2013 9 85 6 51.5
Jan 2013 10 85 5 52.5

Inventories

ISM’s Non-Manufacturing Inventories Index grew in April for the third consecutive month. The index registered 56 percent, which is 4.5 percentage points higher than the 51.5 percent reported in March. Of the total respondents in April, 26 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Overseas shipments ordered last year are now arriving” and “Increased inventory to support maintenance activities.”

The 11 industries reporting an increase in inventories in April — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Educational Services; Utilities; Mining; Retail Trade; Arts, Entertainment & Recreation; Accommodation & Food Services; Real Estate, Rental & Leasing; Finance & Insurance; Construction; and Wholesale Trade. The five industries reporting decreases in inventories in April are: Other Services; Health Care & Social Assistance; Information; Professional, Scientific & Technical Services; and Public Administration.

Inventories %Higher %Same %Lower Index
Apr 2013 25 62 13 56.0
Mar 2013 16 71 13 51.5
Feb 2013 20 68 12 54.0
Jan 2013 16 62 22 47.0

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in April for the 43rd consecutive month. ISM’s Non-Manufacturing Prices Index for April registered 51.2 percent, 4.7 percentage points lower than the 55.9 percent reported in March. In April, the percentage of respondents reporting higher prices is 22 percent, the percentage indicating no change in prices paid is 68 percent, and 10 percent of the respondents reported lower prices.

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

Prices %Higher %Same %Lower Index
Apr 2013 22 68 10 51.2
Mar 2013 26 68 6 55.9
Feb 2013 31 63 6 61.7
Jan 2013 23 72 5 58.0

Backlog of Orders

ISM’s Non-Manufacturing Backlog of Orders Index grew in April for the third consecutive month. The index registered 51.5 percent, which is 3 percentage points lower than the 54.5 percent that was reported in March. Of the total respondents in April, 39 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in April — listed in order — are: Construction; Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Public Administration; and Wholesale Trade. The five industries reporting a decrease in order backlogs are: Other Services; Retail Trade; Mining; Finance & Insurance; and Health Care & Social Assistance. Six industries reported no change in backlog of orders for the month of April compared to March.

Backlog of Orders %Higher %Same %Lower Index
Apr 2013 15 73 12 51.5
Mar 2013 18 73 9 54.5
Feb 2013 18 73 9 54.5
Jan 2013 15 68 17 49.0

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 April for the fourth consecutive month. The New Export Orders Index for April registered 53.5 percent, which is 3 percentage points lower than the 56.5 percent reported in March. Of the total respondents in April, 69 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The six industries reporting an increase in new export orders in April — listed in order — are: Construction; Information; Management of Companies & Support Services; Accommodation & Food Services; Public Administration; and Professional, Scientific & Technical Services. The four industries reporting a decrease in export orders in April are: Health Care & Social Assistance; Other Services; Finance & Insurance; and Wholesale Trade.

New Export Orders %Higher %Same %Lower Index
Apr 2013 22 63 15 53.5
Mar 2013 29 55 16 56.5
Feb 2013 29 63 8 60.5
Jan 2013 27 57 16 55.5 

Imports

The ISM Non-Manufacturing Imports Index grew in April for the fourth consecutive month. This month’s reading at 58.5 percent is 1 percentage point higher than the 57.5 percent reported in March. Fifty-seven percent of respondents reported that they do not use, or do not track the use of, imported materials.

The eight industries reporting an increase in imports for the month of April — listed in order — are: Finance & Insurance; Public Administration; Retail Trade; Wholesale Trade; Construction; Information; Professional, Scientific & Technical Services; and Accommodation & Food Services. The two industries reporting a decrease in imports for the month of April are: Health Care & Social Assistance; and Transportation & Warehousing. Eight industries reported no change in imports for the month of April compared to March.

Imports %Higher %Same %Lower Index
Apr 2013 20 77 3 58.5
Mar 2013 21 73 6 57.5
Feb 2013 12 81 7 52.5
Jan 2013 10 82 8 51.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in April registered 60.5 percent, which is 1 percentage point higher than the 59.5 percent reported in March. This indicates that respondents believe their inventories are still too high at this time. In April, 27 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 67 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in April — listed in order — are: Mining; Utilities; Wholesale Trade; Arts, Entertainment & Recreation; Information; Public Administration; Retail Trade; and Finance & Insurance. The three industries reporting that their inventories are too low in April are: Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; and Professional, Scientific & Technical Services. Six industries reported no change in inventory sentiment for the month of April compared to March.

Inventory Sentiment %Too High %About Right %Too Low Index
Apr 2013 27 67 6 60.5
Mar 2013 24 71 5 59.5
Feb 2013 27 71 2 62.5
Jan 2013 33 62 5 64.0

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. 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 full text version of the Non-Manufacturing ISM Report On Business® is posted on ISM’s website 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 May 2013 data will be released at 10:00 a.m. (ET) on Wednesday, June 5, 2013.

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About The Author

Schwartz joined Group C Media in April 1989 as managing editor of Today's Facility Manager. In September 2012, she transitioned to a new role dedicated to developing online content for Business Facilities and Today's Facility Manager. Schwartz can be reached at [email protected]

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