Summary
Today's report from the Institute for Supply Management on the economy's June non-manufacturing activity registered an unexpectedly large decline. Meanwhile, the index's price component rose slightly, indicating that service-sector price pressures remained quite strong.
_____
The Institute for Supply Management reported today that its index measuring the economy's June non-manufacturing activity came in at a reading of 59.9, down from May's result of 65.2. This measure operates in the same manner as ISM's manufacturing index: A reading above 50.0 indicates sector expansion. Nevertheless, the June decline was a good deal larger than the consensus forecast, which was looking for a number of around 65.0.
The non-manufacturing index's price component was essentially flat in June, coming in at 74.6, versus May's 74.4. This was the 27th consecutive month of rising prices, and the 74.6 reading indicated that service-sector price pressures remained fairly stiff. ISM reported that 52% of its survey respondents reported higher prices during the month, with 3% reporting lower ones. This compared with a 26%/4% split as recently as January.
The following table examines overall and prices data over 2004's first six months.
--------------------------------------------
INSTITUTE FOR SUPPLY MANAGEMENT
NON-MANUFACTURING INDEX -- TOTAL
INDEX AND PRICES COMPONENT
--------------------------------------------
Respondents Reporting
Higher, Lower, or
Unchanged Prices
Month/ Overall Price ---------------------
Year Index Index Higher Lower Unch.
--------------------------------------------
06/04 59.9 74.6 52% 3% 45%
05/04 65.2 74.4 55% 3% 42%
04/04 68.4 68.6 53% 3% 44%
03/04 65.8 65.7 43% 3% 54%
02/04 60.8 57.3 31% 9% 60%
01/04 65.7 59.7 26% 4% 70%
--------------------------------------------
The ISM employs a very comprehensive list of commodities and services to determine the price trends in its two indexes (manufacturing and non-manufacturing). The items that are surveyed to determine the prices paid by non-manufacturing organizations for purchased materials and services are:
Air Conditioning and Parts; Airfares; Aluminum/Aluminum Products; Beef; Butter; Cable and Cable Wire; Carbon Steel; Cheese; Chicken; Computer Hardware; Conduit and Fittings; Copiers; Copier Paper; Copper; Copper Products including Pipe, Cable, Tubing, and Wire; Corn; Corrugated; Cotton Goods / Products; #2 Diesel Fuel; Dairy and Dairy Products; Electricity; Energy; Fittings; Fuel; Gasoline; #2 Heating Oil; Metal; Metal Products; Nickel; Oil; Pagers/Paging Services; Paper; Paper Products; Petroleum-Based Products; Plastic; Plastic Bags; Polyethylene Films; Polypropylene; Pork; Poultry; Printed Materials; PVC/PVC Pipe and Fittings; Shipping Costs; Soy Oil; Soybean Meal; Stainless Steel; Stainless Steel Welding Wire/Electrode; Steel; Steel Beams; Steel Coil; Steel Pipe and Fittings; Steel Products (large variety); Steel-Related Products; Steel Scrap; Unleaded Gasoline and Valves.
__________
| 