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

Following is the text of U.S. non-manufacturing conditions from the Institute for Supply Management. Economic activity in the non-manufacturing sector grew in March for the 27th 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 56 percent in March, 1.3 percentage points lower than the 57.3 percent registered in February, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non- Manufacturing Business Activity Index registered 58.9 percent, which is 3.7 percentage points lower than the 62.6 percent reported in February, reflecting growth for the 32nd consecutive month. The New Orders Index decreased by 2.4 percentage points to 58.8 percent, and the Employment Index increased by 1 percentage point to 56.7 percent, indicating continued growth in employment at a slightly faster rate. The Prices Index decreased 4.5 percentage points to 63.9 percent, indicating prices increased at a slower rate in March when compared to February. According to the NMI, 16 non-manufacturing industries reported growth in March. Respondents’ comments remain mostly optimistic about business conditions. They indicate that increased discretionary spending reflects the increased confidence level of businesses and consumers. There is continued concern about cost pressures and the instability of fuel prices.”

INDUSTRY PERFORMANCE

The 16 non-manufacturing industries reporting growth in March -- listed in order -- are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Accommodation & Food Services; Construction; Other Services; Wholesale Trade; Finance & Insurance; Information; Public Administration; Health Care & Social Assistance; Utilities; Real Estate, Rental & Leasing; Retail Trade; Educational Services; Professional, Scientific & Technical Services; and Transportation & Warehousing. The two industries reporting contraction in March are: Mining; and Agriculture, Forestry, Fishing & Hunting.

WHAT RESPONDENTS ARE SAYING …

* “2012 continues ahead of forecasted pace through March.” (Wholesale Trade) * “February was a great month for auto sales -- much better than expected.

Forecasted sales volumes for the year are being revised upward.” (Retail

Trade) * “Positive year-over-year growth is finally being seen as customers’

discretionary spend is up, and overall traffic is increasing as well.

Increased investments in marketing promotions and advertising during the

past few months have helped improve customer loyalty, evidenced by longer

stays and increased frequency of visits.” (Arts, Entertainment &

Recreation) * “Companies are seeking professional services to continue efficiencies

while positioning for growth, when the top line comes back.”

(Professional, Scientific & Technical Services) * “We are starting to see the private sector building again; the money is

starting to flow into construction.” (Construction) * “Increasing demand for healthcare services while engaging in a more

intense effort to reduce costs universally. [We are doing this] prior to

implementation of healthcare reform, which is expected to dramatically

reduce revenue by approximately 25 percent.” (Health Care & Social

Assistance)

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

Commodities Up in Price

Airfares (3); Aluminum Products; Copper Products (2); Diesel Fuel (2); #1 Diesel Fuel (4); #2 Diesel Fuel (5); Food & Beverage; Freight Charges; Fuel (3); Fuel Products; Fuel Surcharges; Gasoline (3); #2 Heating Fuel (2); Lumber (2); Medical/Surgical Supplies; Pharmaceuticals; Plastic Bags; Plastic Film (2); Plastic Products (2); and Urea.

Commodities Down in Price

Natural Gas (2) is the only commodity reported down in price.

Commodities in Short Supply

Crab (3); and Pharmaceuticals.

Note: The number of consecutive months the commodity is listed is indicated after each item.

MARCH 2012 NON-MANUFACTURING INDEX SUMMARIES

NMI

In March, the NMI registered 56 percent, indicating continued growth in the non-manufacturing sector for the 27th 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 March registered 58.9 percent, 3.7 percentage points lower than the 62.6 percent registered in February. Thirteen industries reported increased business activity, and four industries reported decreased activity for the month of March. Comments from respondents include: “Economy seems to be recovering” and “New/increased sales booked.”

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

New Orders

ISM’s Non-Manufacturing New Orders Index grew in March for the 32nd consecutive month. The index registered 58.8 percent, a decrease of 2.4 percentage points from the 61.2 percent reported in February. Comments from respondents include: “Improved business activity/more marketing effort” and “Market picking up.”

The 14 industries reporting growth of new orders in March -- listed in order -- are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Construction; Finance & Insurance; Accommodation & Food Services; Information; Real Estate, Rental & Leasing; Other Services; Wholesale Trade; Utilities; Public Administration; Retail Trade; Transportation & Warehousing; and Professional, Scientific & Technical Services. The three industries reporting contraction of new orders in March are: Mining; Health Care & Social Assistance; and Educational Services.

Employment

Employment activity in the non-manufacturing sector grew in March at a slightly faster rate, as ISM’s Non-Manufacturing Employment Index registered 56.7 percent. This reflects an increase of 1 percentage point when compared to the 55.7 percent registered in February. Thirteen industries reported increased employment, four industries reported decreased employment, and one industry reported unchanged employment compared to February. Comments from respondents include: “Adding staff to support expansion” and “Increasing demand.”

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

Supplier Deliveries

The Supplier Deliveries Index registered 49.5 percent in March. This is the same percentage rate registered in February, indicating that supplier deliveries were faster in March for the second consecutive month. A reading above 50 percent indicates slower deliveries, and below 50 percent indicates faster deliveries.

The five industries reporting slower deliveries in March are: Mining; Retail Trade; Educational Services; Public Administration; and Wholesale Trade. The four industries reporting faster supplier deliveries in March are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Information; and Utilities. Nine industries reported no change in supplier deliveries in March compared to February.

Inventories

ISM’s Non-Manufacturing Inventories Index grew in March for the second consecutive month. The index registered 54 percent, which is 0.5 percentage point higher than the 53.5 percent reading that was reported in February. Of the total respondents in March, 26 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “We are trying to keep more stock on key SKUs to meet unforecasted demand” and “Increased orders.”

The nine industries reporting an increase in inventories in March -- listed in order -- are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Construction; Wholesale Trade; Information; Transportation & Warehousing; Accommodation & Food Services; Retail Trade; and Utilities. The three industries reporting decreases in inventories in March are: Health Care & Social Assistance; Professional, Scientific & Technical Services; and Finance & Insurance. Six industries reported no change in Inventories in March compared to February.

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased at a slower rate in March. ISM’s Non- Manufacturing Prices Index for March registered 63.9 percent, 4.5 percentage points lower than the 68.4 percent reported in February. In March, the percentage of respondents reporting higher prices is 40 percent, the percentage indicating no change in prices paid is 58 percent, and 2 percent of the respondents reported lower prices.

Sixteen non-manufacturing industries reported an increase in prices paid during the month of March, in the following order: Arts, Entertainment & Recreation; Utilities; Wholesale Trade; Retail Trade; Educational Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Public Administration; Real Estate, Rental & Leasing; Other Services; Finance & Insurance; Health Care & Social Assistance; Mining; Information; Transportation & Warehousing; and Construction. No industries reported a decrease in prices paid during March.

Backlog of Orders

ISM’s Non-Manufacturing Backlog of Orders Index contracted in March after one month of growth. The index registered 49.5 percent, 3.5 percentage points lower than the 53 percent reported in February. Of the total respondents in March, 39 percent indicated they do not measure backlog of orders.

The five industries reporting an increase in order backlogs in March are: Construction; Educational Services; Utilities; Finance & Insurance; and Public Administration. The seven industries reporting lower backlog of orders in March -- listed in order -- are: Mining; Accommodation & Food Services; Other Services; Retail Trade; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Wholesale Trade. Six industries reported no change in order backlogs for the month of March compared to February.

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 for the eighth consecutive month. The New Export Orders Index for March registered 52.5 percent, which is 2 percentage points lower than the 54.5 percent reported in February. Of the total respondents in March, 68 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 March -- listed in order -- are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Construction; Information; Finance & Insurance; and Wholesale Trade. The three industries reporting a decrease in export orders in March are: Retail Trade; Accommodation & Food Services; and Professional, Scientific & Technical Services.

Imports

The ISM Non-Manufacturing Imports Index grew in March for the fourth consecutive month. The index registered 56 percent, which is 4 percentage points higher than the 52 percent reported in February. Fifty- eight percent of respondents reported that they do not use, or do not track, the use of imported materials.

The nine industries reporting an increase in the use of imports in March -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Arts, Entertainment & Recreation; Other Services; Construction; Information; Accommodation & Food Services; Wholesale Trade; and Retail Trade. The two industries reporting a decrease in imports for the month of March are: Transportation & Warehousing; and Professional, Scientific & Technical Services. Seven industries reported no change in imports for the month of March compared to February.

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in March registered 58.5 percent, which is 3 percentage points lower than the 61.5 percent reported in February. This indicates that respondents believe their inventories are still too high at this time. In March, 23 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 71 percent said their inventories were about right.

The six industries reporting a feeling that their inventories are too high in March -- listed in order -- are: Other Services; Mining; Health Care & Social Assistance; Utilities; Finance & Insurance; and Wholesale Trade. The two industries reporting that their inventories are too low in March are: Real Estate, Rental & Leasing; and Retail Trade. Seven industries reported no change in inventory sentiment in March compared to February.

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 largest supply management research and education organization in the United States. The Institute for Supply Management™, established in 1915, is the largest supply management organization in the world as well as one of the most respected. 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 April 2012 data will be released at 10:00 a.m. (ET) on Thursday, May 3, 2012.

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

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