Summary
Today's release from the Institute for Supply Management on the economy's August non-manufacturing activity reported a larger-than-expected decline. Also falling was the index's price component, but to a level still high by historical standards, indicating that price pressures in the service sector persist.
_____
Earlier today, the Institute for Supply Management reported that its index measuring the economy's August non-manufacturing activity came in at a reading of 58.2, down from July's 64.8. This measure operates in the same manner as ISM's manufacturing index: A reading above 50.0 indicates sector expansion.
However, August's non-manufacturing result was materially weaker than the consensus estimate, which was looking for something in the area of 62+. In fact, August's 58.2 was the weakest monthly result for this year to date.
Today's report showed a 3.1-point decline during August in the index's price component, to 70.0, but this still marked the 29th consecutive month of rising prices. Moreover, a 70.0 reading is high and indicates that overall service-sector price pressures remained fairly stiff.
ISM did report a decline in the number of its survey respondents reporting higher prices during August, to 40% from July's 45%. Only 4% of respondents reported lower prices, while 56% reported unchanged prices. This compared with a 26%/4%/70% result as recently as January.
The following table examines overall and price data over 2004's first eight months.
--------------------------------------------
INSTITUTE FOR SUPPLY MANAGEMENT
NON-MANUFACTURING INDEX -- TOTAL
INDEX AND PRICE COMPONENT
--------------------------------------------
Respondents Reporting
Higher, Lower, or
Unchanged Prices
Month/ Overall Price ---------------------
Year Index Index Higher Lower Unch.
--------------------------------------------
08/04 58.2 70.0 40% 4% 56%
07/04 64.8 73.5 45% 5% 50%
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. I thought readers would be interested in what they are. The commodities that are surveyed to determine the prices paid by manufacturing organizations:
Aluminum; Aluminum Extrusions; Aluminum Sheet; Butadiene; Cardboard; Caustic Soda; Chemicals; Coal; Copper and Copper Products; Corrugated Containers; Corrugated Products; Crude Oil; Diesel Fuel; DRAMS; Eggs; Electric Components; Electric Motors; Electronic Components; Energy; Fasteners; Flash Memory; Freight; Fuel; Fuel Oil; Gasoline; Hardwood Lumber; HDPE; Integrated Circuits; Natural Gas; Nickel; Paper; Particle Board; Plastic Resin; Plastics; Plywood; Pulp; Stainless Steel; Stainless Steel Bars; Stainless Steel Products (various forms); Steel; Steel Products (various forms) and Steel Scrap.
The items that are surveyed to determine the prices paid by non-manufacturing organizations for purchased materials and services:
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.
__________
| 