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FOR RELEASE: July 3, 2019

Contact:   Kristina Cahill
Report On Business® Analyst
ISM®, ROB/Research Manager
Tempe, Arizona
480-752-6276, Ext. 3015
E-mail: kcahill@instituteforsupplymanagement.org

 


June 2019 Non-Manufacturing ISM® Report On Business®

NMI® at 55.1%


Business Activity Index at 58.2%

New Orders Index at 55.8%

Employment Index at 55%


(Tempe, Arizona) – Economic activity in the non-manufacturing sector grew in June for the 113th 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, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: “The NMI® registered 55.1 percent, which is 1.8 percentage points lower than the May reading of 56.9 percent. This represents continued growth in the non-manufacturing sector, at a slower rate. This is the index’s lowest reading since July 2017, when it registered 55.1 percent. The Non-Manufacturing Business Activity Index decreased to 58.2 percent, 3 percentage points lower than the May reading of 61.2 percent, reflecting growth for the 119th consecutive month. The New Orders Index registered 55.8 percent; 2.8 percentage points lower than the reading of 58.6 percent in May. The Employment Index decreased 3.1 percentage points in June to 55 percent from the May reading of 58.1 percent. The Prices Index increased 3.5 percentage points from the May reading of 55.4 percent to 58.9 percent, indicating that prices increased in June for the 25th consecutive month. According to the NMI®, 16 non-manufacturing industries reported growth. Although the non-manufacturing sector’s growth rate dipped in June, the sector continues to reflect strength. The comments from the respondents reflect mixed sentiment about business conditions and the overall economy. A degree of uncertainty exists due to trade and tariffs.”

INDUSTRY PERFORMANCE

The 16 non-manufacturing industries reporting growth in June — listed in order — are: Real Estate, Rental & Leasing; Other Services; Finance & Insurance; Accommodation & Food Services; Health Care & Social Assistance; Mining; Construction; Educational Services; Professional, Scientific & Technical Services; Utilities; Public Administration; Information; Management of Companies & Support Services; Transportation & Warehousing; Retail Trade; and Wholesale Trade. The only industry reporting a decrease is Arts, Entertainment & Recreation.

WHAT RESPONDENTS ARE SAYING
  • “Low milk prices and a weakened dairy economy resulted in reduced feed sales.” (Agriculture, Forestry, Fishing & Hunting)
  • “New residential sales are off the typical pace by 10 to 15 percent year over year. Tariffs are working their way through the system, raising costs on finished materials. Wet weather has slowed construction and starts for the beginning of the season.” (Construction)
  • “The continued restructuring of ocean-carrier routing is still causing havoc in the supply chain. We are experiencing minimal impact due to an increase in inventory levels.” (Wholesale Trade)
  • “The largest business condition impacting general purchasing operations is the increased cost of goods due to the tariffs placed on China.” (Retail Trade)
  • “Business continues to run well, [with] indications of slowing customer demand and improvement in supplier delivery performance.” (Transportation & Warehousing)
  • “General conditions are steady — not increasing or going down.” (Finance & Insurance)
  • “Waiting to see what new tariffs on Mexican steel will do to the market.” (Professional, Scientific & Technical Services)
  • “The suppliers we do business with are ‘claiming tariffs’ to justify price increases. While some of these issues could be credible, it’s our opinion that this issue provides cover to increase margins, as few will detail the line-item impact.” (Management of Companies & Support Services)
  • “Closely watching the Trump tariffs on China, which could significantly impact medical supplies.” (Health Care & Social Assistance)
  • “Business is stable, but very fast paced. The labor market is tighter than ever, and we cannot work enough hours.” (Public Administration)

ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS*
June 2019

 Non-ManufacturingManufacturing
IndexSeries Index JunSeries Index MayPercent Point ChangeDirectionRate of ChangeTrend** (Months)Series Index JunSeries Index MayPercent Point Change
NMI®/ PMI® 55.1 56.9 -1.8 Growing Slower 113 51.7 52.1 -0.4
Business Activity/ Production 58.2 61.2 -3.0 Growing Slower 119 54.1 51.3 +2.8
New Orders 55.8 58.6 -2.8 Growing Slower 119 50.0 52.7 -2.7
Employment 55.0 58.1 -3.1 Growing Slower 64 54.5 53.7 +0.8
Supplier Deliveries 51.5 49.5 +2.0 Slowing From Faster 1 50.7 52.0 -1.3
Inventories 55.0 54.0 +1.0 Growing Faster 3 49.1 50.9 -1.8
Prices 58.9 55.4 +3.5 Increasing Faster 25 47.9 53.2 -5.3
Backlog of Orders 56.0 52.5 +3.5 Growing Faster 18 47.4 47.2 +0.2
New Export Orders 55.5 55.5 0.0 Growing Same 29 50.5 51.0 -0.5
Imports 50.0 50.0 0.0 Unchanged Same 2 50.0 49.4 +0.6
Inventory Sentiment 58.5 58.5 0.0 Too High Same 264 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 44.6 43.7 +0.9
Overall Economy Growing Slower 119
Non-Manufacturing Sector Growing Slower 113
Non-Manufacturing ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes.
Manufacturing ISM ® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries Indexes.
*Number of months moving in current direction.

Commodities reported up/down in price and in short supply


Commodities Up in Price

Bacon; Cheese; Dairy (2); Diesel Fuel (4); Fuel (3); Gasoline (4); Labor — Information Technology; Light Fixtures; Oil; Paper Products; Pork Products; Steel Products; and Software Maintenance.

 

Commodities Down in Price

Copper; Corrugated Boxes; Fuel; Gasoline; Implantable Devices; and Natural Gas.

 

Commodities in Short Supply

Construction Subcontractors (18); Labor (9); Labor — Construction (39); Labor — Professional; Medical Supplies; and Tubing (3).

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


June 2019 Non-Manufacturing Index Summaries


NMI®

In June, the NMI® registered 55.1 percent, 1.8 percentage points lower than the 56.9 percent in May. The non-manufacturing sector grew for the 113th 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.

An NMI® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the June NMI® indicates growth for the 119th consecutive month in the overall economy and expansion in the non-manufacturing sector for the 113th consecutive month. Nieves says, “The past relationship between the NMI® and the overall economy indicates that the NMI® for June (55.1 percent) corresponds to a 2.3-percent increase in real gross domestic product (GDP) on an annualized basis.”

NMI® History

MonthNMI®
Jun 2019 55.1
May 2019 56.9
Apr 2019 55.5
Mar 2019 56.1
Feb 2019 59.7
Jan 2019 56.7
MonthNMI®
Dec 2018 58.0
Nov 2018 60.4
Oct 2018 60.0
Sep 2018 60.8
Aug 2018 58.8
Jul 2018 56.7
57.9
60.8
55.1

Business Activity

ISM®’s Business Activity Index registered 58.2 percent in June, a decrease of 3.0 percentage points from the May reading of 61.2 percent. This represents growth in business activity for the 119th consecutive month. Fifteen industries reported increased business activity. Comments from respondents include: “Dairy farms going out of business” and “New project awarded.”

The 15 industries reporting growth of business activity in June — listed in order — are: Other Services; Real Estate, Rental & Leasing; Educational Services; Finance & Insurance; Accommodation & Food Services; Mining; Information; Utilities; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Construction; Public Administration; Retail Trade; and Wholesale Trade. The only industry reporting a decrease in business activity for the month of June is Arts, Entertainment & Recreation.

Business Activity% Higher% Same% LowerIndex
Jun 2019 32 56 12 58.2
May 2019 33 59 8 61.2
Apr 2019 36 56 8 59.5
Mar 2019 33 52 15 57.4

New Orders

ISM®’s Non-Manufacturing New Orders Index registered 55.8 percent, a decrease of 2.8 percentage points from the May reading of 58.6 percent. New orders grew in June for the 119th consecutive month, at a slower rate compared with May. Comments from respondents include: “June is seasonally slower including new implementation projects” and “Cyclical buying pattern at this time of the year.”

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

New Orders% Higher% Same% LowerIndex
Jun 2019 32 54 14 55.8
May 2019 30 59 11 58.6
Apr 2019 36 54 10 58.1
Mar 2019 33 53 14 59.0

Employment

Employment activity in the non-manufacturing sector grew in June for the 64th consecutive month. ISM®’s Non-Manufacturing Employment Index registered 55 percent, a decrease of 3.1 percentage points from the May reading of 58.1 percent. Nine industries reported increased employment, and five industries reported decreased employment. Comments from respondents include: “We are currently recruiting for vacant positions” and “Downsizing due to closing brick-and-mortar stores.”

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

Employment% Higher% Same% LowerIndex
Jun 2019 28 61 11 55.0
May 2019 28 62 10 58.1
Apr 2019 23 62 15 53.7
Mar 2019 25 62 13 55.9

Supplier Deliveries

The Supplier Deliveries Index registered 51.5 percent, which is 2 percentage points higher than the 49.5 percent registered in May. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Some suppliers experiencing issues with getting help” and “Reduced demand.”

The five industries reporting slower deliveries in June are: Construction; Utilities; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Public Administration. The five industries reporting faster deliveries are: Transportation & Warehousing; Information; Wholesale Trade; Real Estate, Rental & Leasing; and Mining. Eight industries reported no change in supplier deliveries in June as compared to May.

Supplier Deliveries% Slower% Same% FasterIndex
Jun 2019 8 87 5 51.5
May 2019 4 91 5 49.5
Apr 2019 7 87 6 50.5
Mar 2019 9 86 5 52.0

Inventories*

ISM®’s Non-Manufacturing Inventories Index grew in June, registering 55.0 percent, which is 1 percentage point higher than the 54.0 percent that was reported in May. Of the total respondents in June, 30 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Increasing order quantities to add safety stock and secure supply of critical parts” and “Inventories are being used up, [and] there is growing inclination to do buffering with the threat of tariffs.”

The 10 industries reporting an increase in inventories in June — listed in order — are: Utilities; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Construction; Retail Trade; Other Services; Mining; Finance & Insurance; Health Care & Social Assistance; and Accommodation & Food Services. The four industries reporting a decrease in inventories are: Arts, Entertainment & Recreation; Educational Services; Public Administration; and Information.

Inventories% Higher% Same% LowerIndex
Jun 2019 23 64 13 55.0
May 2019 21 66 13 54.0
Apr 2019 21 61 18 51.5
Mar 2019 19 62 19 50.0

Prices*

Prices paid by non-manufacturing organizations for materials and services increased in June for the 25th consecutive month. ISM®’s Non-Manufacturing Prices Index registered 58.9 percent; 3.5 percentage points higher than the 55.4 percent reported in May.

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

Prices% Higher% Same% LowerIndex
Jun 2019 27 65 8 58.9
May 2019 21 76 3 55.4
Apr 2019 20 76 4 55.7
Mar 2019 21 77 2 58.7
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders

ISM®’s Non-Manufacturing Backlog of Orders Index grew in June. The index registered 56 percent, which is 3.5 percentage points higher than the 52.5 percent reported in May. Of the total respondents in June, 37 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in June — listed in order — are: Accommodation & Food Services; Finance & Insurance; Health Care & Social Assistance; Mining; Public Administration; Professional, Scientific & Technical Services; Retail Trade; and Construction. The six industries that reported a decrease in backlogs in June — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Educational Services; Management of Companies & Support Services; Real Estate, Rental & Leasing; and Other Services.

Backlog of Orders% Higher% Same% LowerIndex
Jun 2019 23 66 11 56.0
May 2019 14 77 9 52.5
Apr 2019 20 70 10 55.0
Mar 2019 22 69 9 56.5

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based personnel grew for the 29th consecutive month. The New Export Orders Index registered 55.5 percent in June, which is the same reading that was reported in May. Of the total respondents in June, 62 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The eight industries reporting an increase in new export orders in June — listed in order — are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Information; Construction; Mining; Finance & Insurance; Wholesale Trade; and Professional, Scientific & Technical Services. The six industries that reported a decrease in exports in June — listed in order — are: Utilities; Arts, Entertainment & Recreation; Educational Services; Retail Trade; Management of Companies & Support Services; and Other Services.

New Export Orders% Higher% Same% LowerIndex
Jun 2019 20 71 9 55.5
May 2019 13 85 2 55.5
Apr 2019 20 74 6 57.0
Mar 2019 18 69 13 52.5

Imports

The Imports Index was unchanged, registering 50 percent in June for the second month in a row. Forty-eight percent of respondents reported that they do not use, or do not track the use of, imported materials.

The four industries reporting an increase in imports for the month of June are: Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; and Professional, Scientific & Technical Services. The seven industries that reported a decrease in imports in June — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Management of Companies & Support Services; Transportation & Warehousing; Accommodation & Food Services; Retail Trade; and Other Services. Seven industries reported no change in imports in June as compared to May.

Imports% Higher% Same% LowerIndex
Jun 2019 9 82 9 50.0
May 2019 8 84 8 50.0
Apr 2019 16 78 6 55.0
Mar 2019 13 77 10 51.5
*The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in June registered 58.5 percent, the same reading as in May. This indicates that respondents believe their inventories are still too high.

The 10 industries reporting sentiment that their inventories were too high in June — listed in order — are: Wholesale Trade; Management of Companies & Support Services; Other Services; Information; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Construction; Utilities; Mining; and Health Care & Social Assistance. The three industries reporting a feeling that their inventories were too low in June are: Educational Services; Accommodation & Food Services; and Public Administration.

Inventory Sentiment

Inventory Sentiment% Too High% About Right% Too LowIndex
Jun 2019 23 71 6 58.5
May 2019 21 75 4 58.5
Apr 2019 24 72 4 60.0
Mar 2019 27 71 2 62.5

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of June 2019.

The data presented herein is obtained from a survey of non-manufacturing supply executives 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. The data 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 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 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.

An NMI® above 48.6 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.6 percent, it is generally declining. The distance from 50 percent or 48.6 percent is indicative of the strength of the expansion or decline.

The Non-Manufacturing ISM® Report On Business® survey is 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 report 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 report, 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.

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About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the ISM Mastery Model®. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Non-Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET.

The next Non-Manufacturing ISM® Report On Business® featuring July 2019 data will be released at 10:00 a.m. ET on Monday, August 5, 2019.

*Unless the New York Stock Exchange is closed.



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