Summary
Earlier today, the Institute for Supply Management reported a modest decline during April in its index that measures activity in the nation's service sector. While the index's price component registered a more significant decline, it remained high by historical standards, indicating that cost pressures persist.
_____
The Institute for Supply Management's index measuring the economy's April service-sector activity came in at a reading of 61.7, down from March's 63.1. The April result was a bit better than a consensus estimate of around 61.0.
This series' most recent high was 66.9, occurring in April of 2004. The ISM's service-sector measure works in the same manner as its manufacturing index: A reading above 50.0 indicates sector expansion.
Today's report showed a 3.7-point decline in the index's price component during April, to 61.9. However, a 61.9 reading remains high by historical standards, indicating that overall service-sector price pressures persist. (The recent high recorded in this component was 73.6, registered last December.) April marked the 23nd consecutive month of rising prices.
A couple price-related comments from the "What Respondents Are Saying" section of today's ISM release:
* "Concern over interest rates, energy and materials
costs has constrained capital plans for this
construction season."
* "Fuel and gasoline prices are taking a toll.
Employee benefits costs are increasing and cut
into small pay raises."
* "Rising costs from inflation are being seen
for both materials and labor as we renew
yearly contracts."
ISM reported a slight decline during April in the number of its survey respondents reporting higher prices -- 41%, versus 43% in March. Only 2% of respondents reported lower prices (up from 1% in March), while 57% reported prices that were unchanged (up 1% from March). This compared with a 53%/3%/44% result in April of last year.
The following table examines overall and price data over the last 12 months. (NOTE: December and prior data incorporate new US Department of Commerce seasonal-adjustment factors used by ISM. In this series, ISM does seasonally adjust the price data. It does not do so in its manufacturing index.)
--------------------------------------------
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.
--------------------------------------------
04/05 61.7 61.9 41% 2% 57%
03/05 63.1 65.6 43% 1% 56%
02/05 59.8 66.4 43% 3% 54%
01/05 59.2 66.6 37% 4% 59%
============================================
12/04 63.1 73.6 38% 5% 57%
11/04 61.3 73.2 38% 4% 58%
10/04 61.5 74.0 44% 3% 53%
09/04 58.7 68.8 35% 3% 62%
08/04 59.3 70.1 40% 4% 56%
07/04 63.4 72.4 45% 5% 50%
06/04 61.1 72.9 52% 3% 45%
05/04 63.3 72.0 55% 3% 42%
--------------------------------------------
Materials/Services Reported in Short Supply During April:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
Conveyor Belt/Products and Steel (15).
Materials/Services Reported Up in Price During April:
Air Fares; Aluminum (16); Asphalt/Asphalt Products (2); Beef* (5); Cement/Concrete; Coffee (2); Copper (20); Copper Cable and Wire (2); #1 Diesel Fuel (2); #2 Diesel Fuel (4); Electric Transmission Products/Utility Hardware; Electronic Components & Equipment; Energy; Fertilizer/Components; Food & Beverage Products; Fuel (17); Fuel Surcharges; Gas & Fuel Oil; Gasoline (17); Hotel Rates (5); Janitorial Supplies; Lumber and Lumber Products including Pine and Treated (4); Medical Devices/Equipment; Medical/Surgical Supplies; Metals (3); Natural Gas (8); Oil; Packaging Supplies/Materials* (2); Paper/Paper Products (15); Petroleum; Petroleum-Based Products (3); Petroleum-Related Products; Plastic Items/Products (4); Plastics* (16); Polyester/Films (2); Printing Paper; PVC (4); Roofing Products including Felt, Shingles and Insulation (6); Steel (18); Steel Products* (14); Transportation/Freight Charges (12); and Unleaded Gasoline (3).
Materials/Services Reported Down in Price During March:
Beef*; Cardboard/Corrugated Boxes; Computer Hardware (PCs and related products) (7); Consulting Fees/Services; LCD PC Monitors/Projectors; Office Equipment/Furniture; Office Supplies; Packaging Supplies/Materials*; Plastics*; Print Services; Printed Materials; Printer Toners; and Steel Products*.
*Reported as both up and down in price.
_____
| 