Summary
Today's report from the Institute for Supply Management on the economy's non-manufacturing activity showed a moderate increase for October. Meanwhile, the measure's price component registered a sharp rise, indicating that cost pressures in the service sector persist.
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Earlier today, the Institute for Supply Management reported that its index measuring the economy's October service-sector activity came in at a reading of 59.5, up from September's 56.7. (The 2004 high was 68.4, occurring in April.) This measure operates in the same manner as ISM's manufacturing index: A reading above 50.0 indicates sector expansion.
October's non-manufacturing result was better than a consensus forecast that was looking for a reading of around 58.0. It was very close to Briefing.com's estimate of 60.0.
Today's report showed a strong 7-point increase during October in the index's price component, to 74.1, which marked the 31st consecutive month of rising prices. Moreover, a 74.1 reading is very high by historical standards, indicating that overall service-sector price pressures remained stiff.
ISM reported an increase in the number of its survey respondents reporting higher prices during October, to 44%, versus September's 35%. Only 3% of respondents reported lower prices, while 53% reported prices that were unchanged. This compared with a 26%/4%/70% result in January.
The following table examines overall and price data over 2004's first ten months.
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INSTITUTE FOR SUPPLY MANAGEMENT
NON-MANUFACTURING INDEX -- TOTAL
INDEX AND PRICE COMPONENT
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Respondents Reporting
Higher, Lower, or
Unchanged Prices
Month/ Overall Price ---------------------
Year Index Index Higher Lower Unch.
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10/04 59.8 74.1 44% 3% 53%
09/04 56.7 67.1 35% 3% 62%
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%
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Items 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.
Materials/Services Reported Up in Price During October:
Airfares, 3rd month; Aluminum, 10th month; Asphalt; Concrete; Construction Materials; Copper, 14th month; Corrugated, 6th month; Cut Paper; #2 Diesel Fuel, 11th month; Food/Food Products; Fuel, 11th month; Fuel Surcharges, 4th month; Gasoline, 11th month; Grease/Lubricants; #2 Heating Oil, 4th month; Metal-Related Products; Metals, 3rd month; Natural Gas, 2nd month; Oil/Oil-Related Products; Paper, 9th month; Paper Products, 8th month; Paper Tissues; Petroleum-Based Products; Plastic Bags, 3rd month; Plastic Resins; Plastics, 10th month; Plywood; Polybags, 2nd month; Poly Items; Polyester/Polyester Products; Polyethylene/Polyethylene Products; Polyethylene Film; PVC; PVC Products (various forms); Resin; Steel, 12th month; Steel Products (various forms), 8th month; Steel-Related Products; Tomatoes; Transportation/Freight Charges, 6th month; Travel; Utilities; #10 Window Envelopes, 2nd month.
Materials/Services Reported Down in Price During October:
Beef,4th month; Chicken, 3rd month; Dairy, 3rd month; PC Hardware and Related Products, 2nd month.
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