Summary
The Institute for Supply management reported this morning that its September service-sector index came in at 53.3. This compares with August's reading of 65.0. As was the case with ISM's manufacturing index, released earlier this week, the service-sector index showed a very substantial jump in its prices-paid component.
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* Earlier today, the Institute for Supply Management released the results of its service-sector index covering activity during September. The index came in at a reading of 53.3, versus 65.0 in August.
* The consensus estimate was looking for a September result of something around 59. Therefore, the actual number was much weaker than expected. In September of 2004, this index stood at 58.7.
* "New orders" and "employment," two of the service-sector index's more important components, showed substantial declines during September, down 9.2 points and 4.7 points, respectively. However, both areas remained at values above 50, with respective readings of 56.6 and 54.9.
(NOTE: Overall index and sub-index readings above 50.0 indicate expansion; readings below 50.0 indicate contraction.)
* The index's prices-paid component spiked to 81.4, up a very substantial 14.3 points or 21.3% from August. September was the 28th consecutive month of rising prices.
* The September prices-paid result of 81.4 was this component's highest reading in the history of the overall service-sector index, which had its inception in July of 1997.
* For the 12 months ended September, the service-sector index's high was August's 65.0. Its low was September's 53.3. Therefore, in back-to-back months the index moved from its 2005 high to its 2005 low. The 12-month average through September came in at 60.9, a very sizable 7.6 or 14.3% points above the September result.
* The service-sector index's most recent high was 66.9, occurring in April of 2004. This was 13.6 points or 25.5% above September's result.
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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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09/05 53.3 81.4 58% 2% 40%
08/05 65.0 67.1 36% 6% 58%
07/05 60.5 70.3 39% 3% 58%
06/05 62.2 59.8 27% 5% 68%
05/05 58.5 57.9 27% 5% 68%
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%
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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%
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09/04 58.7 68.8 35% 3% 62%
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* This is ISM's first service-sector report that would reflect possible influence from Hurricane Katrina. In the "What Respondents Are Saying" section of today's report, following are some comments relating either to Katrina or to prices:
* "Concerned with possible shortages in utility products in the near future; for example, wood poles, electric wire, transformers, etc. as they may be diverted to the states affected by the hurricane." (Utilities).
* "Obvious concerns about the availability and prices of raw materials affected by Hurricane Katrina." (Business Services).
* "Jobs being rushed to beat higher prices." (Retail Trade).
* "Energy concerns are top of mind with everyone from our manufacturing suppliers to transportation. Costs are on the rise in almost all sectors due to energy that seems out of control." (Retail Trade).
Commodities Reported in Short Supply During September:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
#2 Diesel Fuel; Gasoline; PVC; and Stretch Film.
Commodities Reported Up in Price During September:
Aircraft Fuel; Airfares (6); Asphalt Products/Materials (7); Beef; Building Materials; Capital Equipment; Car Rentals; Cement; Construction/Construction Services (5); Copper (25); #1 Diesel Fuel (7); #2 Diesel Fuel (9); Electrical Products - Cable, Components, Supplies and Assemblies (4); Energy (3); Freight Charges/Shipping Costs (3); Fuel (22); Fuel-Related Surcharges (3); Gasoline (22); Gypsum Board; #2 Heating Oil; Hotel Rates/Costs (10); Lubricants; Lumber; Natural Gas (4); Oil-Based Products (2); Packaging Supplies/Products; Paper/Paper Products (20); Petrochemical Products (2); Petroleum/Petroleum-Based Products (3); Pharmacy Products/Supplies; Plastic Bags; Plastics/Plastic Products (3); Polyethylene Films; PVC; Roof Shingles; Roofing Felt; Steel; Stretch Film/Wrap; Telecom Products/Services; Transportation (2); Unleaded Gasoline (3); and Wood/Wood Products.
[Commodities Reported Down in Price During September:
Corrugated (2).
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