Institute for Supply Management Releases July Non-Manufacturing ISM Report On Business

Economic activity in the non-manufacturing sector grew in July for the 54th consecutive month, said the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.

According to an association release, the report was issued by Anthony Nieves, chair of the Institute for Supply Management Non- Manufacturing Business Survey Committee.

"The NMI registered 58.7 percent in July, 2.7 percentage points higher than the June reading of 56 percent. This represents continued growth in the Non-Manufacturing sector. This month's NMI is the highest reading for the index since its inception in January 2008. The Non-Manufacturing Business Activity Index increased to 62.4 percent, which is 4.9 percentage points higher than the June reading of 57.5 percent, reflecting growth for the 60th consecutive month at a faster rate. This is the highest reading for the index since February 2011 when the index registered 63.3 percent. The New Orders Index registered 64.9 percent, 3.7 percentage points higher than the reading of 61.2 percent registered in June. This represents the highest reading for the New Orders Index since August 2005 when it registered 65.3 percent.

The Employment Index increased 1.6 percentage points to 56 percent from the June reading of 54.4 percent and indicates growth for the fifth consecutive month. The Prices Index decreased 0.3 percentage point from the June reading of 61.2 percent to 60.9 percent, indicating prices increased at a slightly slower rate in July when compared to June. According to the NMI, 16 non- manufacturing industries reported growth in July.

Industry Performance

The 16 non-manufacturing industries reporting growth in July - listed in order - are: construction; educational services; public administration; real estate, rental and leasing; arts, entertainment and recreation; retail trade; accommodation and food services; professional, scientific and technical services; management of companies and support services; finance and insurance; mining; wholesale trade; health care and social assistance; transportation and warehousing; information; and other services.

The only industry reporting contraction in July is Utilities.

Commodities Reported Up/Down In Price, And In Short Supply

Commodities Up in Price

aluminum based products; bacon (2); beef (2); beef items (8); cheese (2); chicken (2); construction labor; copper products (2); dairy products (8); #1 diesel fuel (7); #2 diesel fuel (8); fish; food and beverage; gasoline* (8); green bell peppers; office supplies; paper (3); paper products; produce; and steel products.

Commodities Down in Price Computer and Peripherals; Gasoline*; and Natural Gas.

Commodities in Short Supply Helium; and Medical IV Solutions (7).

July 2014 Non-Manufacturing Index Summaries

NMI

In July, the NMI registered 58.7 percent, an increase of 2.7 percentage points when compared to June's reading of 56 percent indicating continued growth in the non-manufacturing sector for the 54th consecutive month. This month's NMI is the highest reading for the index since its inception in January 2008. 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 Business Activity Index in July registered 62.4 percent, an increase of 4.9 percentage points above June's reading of 57.5 percent. This represents growth in business activity for the 60th month and the highest reading for the index since February 2011 when it registered 63.3 percent. Thirteen industries reported increased business activity, and one industry reported decreased activity for the month of July.

The industries reporting growth of business activity in July - listed in order - are: Mining; arts, entertainment and recreation; public administration; accommodation and food services; construction; finance and insurance; transportation and warehousing; real estate, rental and leasing; health care and social assistance; professional, scientific and technical services; retail trade; management of companies and support services; and wholesale trade.

The only industry reporting a decrease in business activity in July is Utilities.

New Orders

ISM's Non-Manufacturing New Orders Index grew in July for the 60th consecutive month at a faster rate. The index registered 64.9 percent, an increase of 3.7 percentage points from the June reading of 61.2 percent. This month's New Orders Index is the highest reading since August 2005 when it registered 65.3 percent.

The 14 industries reporting growth of new orders in July - listed in order - are: educational services; mining; real estate, rental and leasing; retail trade; health care and social assistance; public administration; construction; management of companies and support services; finance and insurance; professional, scientific and technical services; information; transportation and warehousing; wholesale trade; and accommodation and food services. The two industries reporting contraction of new orders in July are: other services; and utilities.

Employment

Employment activity in the non-manufacturing sector grew in July for the fifth consecutive month. ISM's Non-Manufacturing Employment Index registered 56 percent, which reflects an increase of 1.6 percentage points when compared to June's reading of 54.4 percent. Thirteen industries reported increased employment, and three industries reported decreased employment.

The 13 industries reporting an increase in employment in July - listed in order - are: other services; construction; wholesale trade; public administration; management of companies and support services; retail trade; real estate, rental and leasing; arts, entertainment and recreation; professional, scientific and technical services; educational services; information; transportation and warehousing; and finance and insurance. The three industries reporting a reduction in employment in July are: mining; health care and social assistance; and utilities.

Supplier Deliveries

The Supplier Deliveries Index registered 51.5 percent in July, 0.5 percentage point higher than the 51 percent registered in June. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries.

The six industries reporting slower deliveries in July - listed in order - are: educational services; accommodation and food services; construction; arts, entertainment and recreation; retail trade; and professional, scientific and technical services. The three industries reporting faster deliveries in July are: transportation and warehousing; information; and finance and insurance. Nine industries reported no change in supplier deliveries in July compared to June.

Inventories

ISM's Non-Manufacturing Inventories registered 51 percent in July, which is 2.5 percentage points lower than the 53.5 percent that was reported in June. Of the total respondents in July, 28 percent indicated they do not have inventories or do not measure them.

The eight industries reporting an increase in inventories in July - listed in order - are: mining; transportation and warehousing; accommodation and food services; utilities; real estate, rental and leasing; retail trade; health care and social assistance; and finance and insurance. The six industries reporting decreases in inventories in July - listed in order - are: other services; arts, entertainment and recreation; management of companies and support services; information; professional, scientific and technical services; and wholesale trade.

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in July for the 58th consecutive month. ISM's Non-Manufacturing Prices Index for July registered 60.9 percent, 0.3 percentage point lower than the 61.2 percent reported in June. The percentage of respondents reporting higher prices is 25 percent, the percentage indicating no change in prices paid is 70 percent, and 5 percent of the respondents reported lower prices.

Thirteen non-manufacturing industries reported an increase in prices paid during the month of July, in the following order: arts, entertainment and recreation; utilities; accommodation and food services; mining; wholesale trade; finance and insurance; construction; retail trade; real estate, rental and leasing; management of companies and support services; transportation and warehousing; health care and social assistance; and professional, scientific and technical services. The two industries reporting a decrease in prices paid for the month of July are: Agriculture, Forestry, Fishing And Hunting; And Information.

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in July for the third consecutive month. The index registered 53 percent, which is the same percentage reported in June. Of the total respondents in July, 45 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in July - listed in order - are: health care and social assistance; transportation and warehousing; real estate, rental and leasing; finance and insurance; construction; accommodation and food services; and professional, scientific and technical services. The five industries reporting a decrease in order backlogs in July are: other services; utilities; information; public administration; and wholesale trade.

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 July for the fourth consecutive month. The New Export Orders Index for July registered 53 percent, which is 2 percentage points lower than the 55 percent reported in June. Of the total respondents in July, 71 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The four industries reporting an increase in new export orders in July are: utilities; construction; other services; and professional, scientific and technical services. The two industries reporting a decrease in export orders in July are: arts, entertainment and recreation; and information. Nine industries reported no change in export orders in July compared to June.

Imports

The ISM Non-Manufacturing Imports Index grew in July for the fifth consecutive month. This month's reading at 54.5 percent is 1.5 percentage points higher than the 53 percent that was reported in June. Sixty-one 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 imports for the month of July - listed in order - are: management of companies and support services; utilities; retail trade; wholesale trade; accommodation and food services; and professional, scientific and technical services. The two industries reporting a decrease in imports for the month of July are: other services; and information. Ten industries reported no change in imports in July compared to June.

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in July registered 58 percent, which is 2.5 percentage points lower than the 60.5 percent reported in June. This indicates that respondents believe their inventories are still too high at this time. In July, 19 percent of respondents said their inventories were too high, 3 percent said their inventories were too low, and 78 percent said their inventories were about right.

The six industries reporting a feeling that their inventories are too high in July - listed in order - are: retail trade; wholesale trade; health care and social assistance; finance and insurance; utilities; and public administration. The two industries reporting a feeling that their inventories are too low in July are: construction; and professional, scientific and technical services. Nine industries reported no change in inventory sentiment in July compared to June.

The Non-Manufacturing ISM Report On Business is published monthly by Institute for Supply Management.

The full text version of the Non-Manufacturing ISM Report On Business is posted on ISM's website at 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 August 2014 data will be released at 10 a.m. (ET) on Thursday, Sept. 4.

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