Summary
Yesterday's report from the Institute for Supply Management on the economy's non-manufacturing activity showed a modest increase for November. Meanwhile, the measure's price component registered a 3.1-point decline. This is still high by historical standards, however, indicating persisting cost pressures in the service sector.
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Yesterday morning, the Institute for Supply Management reported that its index measuring the economy's November service-sector activity came in at a reading of 61.3, up from October's 59.5. (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.
November's non-manufacturing result was better than a consensus forecast that was looking for a reading of 58.0
Yesterday's report showed a 3.1-point decline during November, to 71.0, in the index's price component. However, a 71.0 reading is high by historical standards, indicating that overall service-sector price pressures persist. (The recent high value recorded in this component was 74.6, registered in June.) November marked the 32nd consecutive month of rising prices.
ISM reported a decline in the number of its survey respondents reporting higher prices during November, to 38%, versus October's 44%. Only 4% of respondents reported lower prices, while 58% 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 eleven 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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11/04 61.3 71.0 38% 4% 58%
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 in Short Supply During November:
Concrete, 7th month; Flu Vaccine, 2nd month; Roofing Shingles; Steel, 10th month; Steel Products, 9th month; and Trucking.
Materials/Services Reported Up in Price During November:
Airfares, 4th month; Aluminum, 11th month; Asphalt Products, 2nd month; Butter; Chemicals/Chemical Products; Concrete, 2nd month; Copper/Copper Cable, 15th month; Copy Paper; Corrugated, 7th month; #2 Diesel Fuel, 12th month; Energy; Fuel, 12th month; Gasoline*, 12th month; Insulation; Lumber*; Natural Gas, 3rd month; Oil/Oil-Based Products, 2nd month; Paper, 10th month; Petroleum Products; Petroleum-Based Products, 2nd month; Plastic Products (various); Plastics, 11th month; Polybags, 3rd month; Produce; PVC Material/Conduit, 2nd month; Resins/Resin-Based Products, 2nd month; Roofing Shingles; Steel, 13th month; Steel Products, 9th month; Strapping; Tape/Tape Media; Tomatoes, 2nd month; Transportation/Freight Charges, 7th month; and Wire/Wire Goods.
Materials/Services Reported Down in Price During November:
Computer Hardware, 2nd month; Computers; Dairy, 4th month; Gasoline*; and Lumber*.
*Reported as both up and down in price.
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