Summary
Yesterday morning, the Institute for Supply management reported that its October service-sector index came in at 60.0. This compares with September's reading of 53.3. The price component eased a little during October, but remained at an elevated level by historical standards.
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* The Institute for Supply Management released the results of its service-sector index yesterday, covering activity during October. The index came in at a reading of 60.0, versus 53.3 in September.
* The consensus estimate was looking for an October result of something around 57. Thus, the actual number was moderately better than expected. In October of 2004, this index stood at 61.5.
* "New orders" and "employment," two of the service-sector index's more important components, showed mixed results during October, registering respective changes of +1.6 points and minus 2.0 points. In September, the new orders series had plummeted 9.2 points. In October, both areas remained at values above the breakpoint of 50, with readings of 58.2 and 52.9, respectively.
(NOTE: Overall index and sub-index readings above 50.0 indicate expansion; readings below 50.0 indicate contraction.)
* The index's prices-paid component fell to 78.0, down a modest 3.4 points from September. However, 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.
* October was the 29th consecutive month of rising prices.
* For the 12 months ended October, the service-sector index's high was 65.0 (in August), and its low was 53.3 (in September). The 12-month average through October came in at 60.8, 0.8 points or 1.3% above the October result.
* The service-sector index's most recent high was 66.9, occurring in April of 2004. This was 6.9 points or 11.5% above October'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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10/05 60.0 78.0 54% 5% 41%
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%
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10/04 61.5 74.0 44% 3% 53%
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*Highest reading in the series' history.
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* In the "What Respondents Are Saying" section of the ISM report, following are some comments relating to prices or price-related areas:
* "Petroleum-related cost increases are causing many customers to reduce their external spending to cover other internal expense increases. Some items are taking longer to get due to increased short-term demand." (Business Services).
* "Hurricane Rita has drawn available products out of our market, causing higher costs and supply shortages." (Const.).
* "Rising energy costs, as a result of the recent storms along the lower Gulf Coast, are having an impact on budgets and may delay planned capital spending unless supply and prices improve." (Other Services).
* "Hurricanes have affected prices and delivery timetables." (Public Administration).
* "Gas prices are definitely affecting retail sales." (Retail Trade).
* "...Due to [Hurricane] Katrina, all foams for upholstery and mattresses experiencing short supply and big price increases - up to 28 percent." (Wholesale Trade).
Commodities Reported in Short Supply During October:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
Construction Materials; Fuel; Petrochemicals; Plastic Products; Polyethylene; PVC (2); PVC Products; Resin-Based Products; Roofing Materials; Stretch Film/Wrap (2); and Tires.
Commodities Reported Up in Price During October:
Airfares (7); Building Materials (2); Carpet; Cement (2); Cheese; Chemicals; Concrete; Construction/Construction Services (6); Construction Labor; Construction Materials; Copper (26); Dairy Products; #1 Diesel Fuel (8); #2 Diesel Fuel (10); Electricity; Energy (4); Energy-Related; Food/Food & Beverage; Freight Charges/Shipping Costs (4); Fuel (23); Fuel-Related Surcharges (4); Gasoline* (23); #2 Heating Oil (2); Hotel Rates/Costs (11); Janitorial Supplies; Lumber (2); Lumber Products; Natural Gas (5); Oil; Oil-Based Products (3); Packaging Supplies/Products (2); Paper/Paper Products (21); Petroleum/Petroleum-Based Products (4); Plastic Bags (2); Plastics/Plastic Products (4); Plywood; Poly Bags; Poly Products (various); Polyethylene Films (2); Printing/Printed Materials; PVC (2); Resin-Based (or related) Products; Roofing Materials (2); Steel (2); Steel Pipe; Stretch Film/Wrap (2); Transportation (3); Travel Costs; Tube Fittings/Tubing; and Vinyl.
Commodities Reported Down in Price During October:
Beef/Steaks/Frozen Beef; Corn; Corrugated (3); Gasoline*; Office Products/Supplies; Soybean Material/Meal; and Unleaded Gasoline.
*Reported as both up and down in price.
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