ISM Non-Manufacturing NMI is 53.7% for May 2012

The May 2012 ISM Non-manufacturing report shows the overall index increased +0.2 to 53.7%. The NMI is also referred to as the services index, or service sector index.



New orders increased +2.0 percentage points to 55.5% and prices plunged -3.8 percentage points to 49.8%. This is the first month-to-month price drop since July 2009. Employment is terrible with a -3.4 percentage point drop, now barely in the expansion, at 50.8%.

Below is a copy of the ISM services table, abbreviated.


Index Series
Direction Rate
NMI 53.7 53.5 +0.2 Growing Faster 29
Business Activity/Production 55.6 54.6 +1.0 Growing Faster 34
New Orders 55.5 53.5 +2.0 Growing Faster 34
Employment 50.8 54.2 -3.4 Growing Slower 5
Supplier Deliveries 53.0 51.5 +1.5 Slowing Faster 2
Inventories 56.0 54.0 +2.0 Growing Faster 4
Prices 49.8 53.6 -3.8 Decreasing From Increasing 1
Backlog of Orders 53.0 53.0 0.0 Growing Same 2
New Export Orders 53.0 58.0 -5.0 Growing Slower 10
Imports 53.0 56.5 -3.5 Growing Slower 6
Inventory Sentiment 63.0 61.0 +2.0 Too High Faster 180


Below is the graph for the non-manufacturing ISM business activity index, or current conditions, what we're doin' now meter. Business activity increased +1.0 percentage points to 55.6%. Here is the ISM's ordered services sector business activity list:

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



New orders increased 2.0 percentage points to 55.5%. Generally 50% is the inflection point between expansion and contraction. New orders are an indicator of future business activity. Information, which are publishers including software, topped the ordered list of new orders. Transportation & Warehousing also came alive.



The employment index dropped -3.4 points to 50.8%. Anything below 50 means contraction or in the case of workers, firing people. The below graph has been normalized to 50, the ISM inflection point for expansion versus contraction. This is just more bad news for employment. This survey just reinforces further May's terrible employment report. Check out these comments from survey respondents, which equate to labor arbitraging their staff even further:

Reduction of excess FTE [full-time equivalent] capacity and organizational consolidation to handle additional work and growth.



Below are supplier deliveries or vendor supplies and it's how fast businesses are getting their stuff to make more stuff. Above 50 is a slow down, which is opposite how many of these sub-indices are defined. Slow-downs mean more demand and also can limit the ability of that business to produce, or business activity. No stuff to make more stuff and you're stuck. This month the index increased +1.5 percentage points to 53.0, so supplies are getting to the these businesses slower.



Prices paid by the services sector dropped -3.8 percentage points to 49.8% and switched to decreasing, the first time since July 2009. Below is the order list of increased prices:

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



Order backlogs had no change from last month and are 53%, which indicates expansion.



Inventories increased +2.0 percentage points to 56%. One survey respondent said demand for our products is higher, a comment we'd love to see more of.



Export orders, or new orders from overseas decreased -0.5 percentage points to 53%, and use of import materials for their businesses decreased -3.5 percentage points to 53%. These numbers are iffy for only 33% track exports and 41% track whether their materials are imported or not.

Below is the services sector ordered list reporting expansion vs. contraction overall:

The 13 non-manufacturing industries reporting growth in May — listed in order — are: Information; Transportation & Warehousing; Accommodation & Food Services; Management of Companies & Support Services; Educational Services; Wholesale Trade; Construction; Retail Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Finance & Insurance; Utilities; and Public Administration. The three industries reporting contraction in May are: Arts, Entertainment & Recreation; Health Care & Social Assistance; and Mining.

The NMI is made up of: Business Activity, New Orders, Employment and Supplier Deliveries, all equally weighted.

To read more sub-indices and details see the actual report (although no eye candy from the ISM).

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