Summary
Earlier this morning, the Institute for Supply management reported that its November service-sector index came in at 58.5. This compared with October's reading of 60.0. The price component eased a bit in October, and it eased a little more during November. However, November's level remained very high by historical standards.
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* The Institute for Supply Management released the results of its service-sector index this morning, covering activity during November. The index came in at a reading of 58.5, versus 60.0 in October.
* The consensus estimate was looking for a November result slightly over 59. Thus, the actual number was a bit worse than expected. In October of 2004, this index stood at 61.3.
* New orders, employment, supplier deliveries and inventories, four of the service-sector index's more important components, were all stronger in November versus October, registering respective gains of 1.3, 4.1, 2.0 and 4.0 points. In addition, all four components had November values above the breakpoint of 50, with readings of 59.5, 57.0, 60.5 and 54.0 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 74,2, down a relatively modest 3.8 points from October. 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.
* November was the 30th consecutive month of rising prices.
* For the 12 months ended November, the service-sector index's high was 65.0 (in August), and its low was 53.3 (in September). The 12-month average through November came in at 60.5, 2.0 points or 3.4% above the November result.
* To some degree, the back-to-back strongest/weakest readings in August and September reflected the influence of Hurricane Katrina on the overall results.
* The service-sector index's most recent high was 66.9, occurring in April of 2004. This was 8.4 points or 14.4% above November'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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11/05 58.5 74.2 44% 8% 48%
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%
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11/04 61.3 73.2 38% 4% 58%
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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:
* "Much pricing pressures and material shortages." (Construction).
* "Business in retail and middle market growing, but very, very competitive market with margin pressure..." (Finance & Banking).
* "Fuels continue to have a negative impact with transportation surcharges running 23 to 30 percent." (Retail Trade).
* "Freight costs are increasing and there are shipping delays from products coming out of Asia due to the holiday rush." (Wholesale Trade).
Commodities Reported in Short Supply During November:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
Building Materials/Supplies (2); Concrete; Construction Labor; Flu Vaccine; Plastic Bags; Plastic Resins; PVC Products (2); and Roofing Materials (2).
Commodities Reported Up in Price During November:
Airfares (8); Airfreight; Asphalt/Asphalt Products; Beef/Beef Trimmings*; Building Materials (3); Car Rentals; Carbon Steel Pipe; Cement/Cement Products (3); Chemicals (2); Coffee/Coffee Products; Computer Accessories/Chips/Peripherals; Copper (27); Copper Products (various); Corrugated; #1 Diesel Fuel (9); #2 Diesel Fuel (11); Energy (5); Freight Charges/Shipping Costs (5); Fuel* (24); Fuel-Related Surcharges (5); Gasoline* (24); #2 Heating Oil (3); Hotel Rates/Costs (12); Lumber Products; Medical/Surgical Supplies; Natural Gas (6); Office Supplies; Packaging/Packaging Supplies (3); Paper/Paper Products (22); Petrochemical Products; Plastic Shopping Bags (3); Plastics/Plastic Products (5); Plastic Resins; Poly Products (various) (2); PVC/PVC Products (3); Resin-Based (or related) Products (2); Roofing Materials (3); Sheetrock (Drywall); Shipping; Sugar; Telecom Products/Services; Transportation (4); Travel Costs (2); and Valves/Valve Parts.
Commodities Reported Down in Price During November:
Beef/Beef Trimmings* (2); Diesel Fuel; Fuel*; Gasoline* (2); Lumber - Pine, Spruce and Treated; and Unleaded Gasoline (2).
*Reported as both up and down in price.
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