Summary
Earlier this morning, the Institute for Supply management reported that its December service-sector index came in at 59.8, versus a November reading of 58.5. The price component eased in December to 69.5, but this is a level that remains 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 December. The index came in at a reading of 59.8, compared with November's 58.5.
* In December of 2004, this index stood at 63.1, 3.3 points or 5.5% above December 2005.
* The consensus estimate was looking for a December 2005 result of around 59. Thus, the actual number was modestly better than expected.
* The December performance of selected components:
New Orders +2.4 to 61.9
Inventories +2.0 to 56.0
Employment +0.1 to 57.1
Backlog of Orders 0.0 to 54.0
Supplier Deliveries -4.0 to 56.5 (= slower)
Prices Paid -4.7 to 69.5
(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 69.5, down 4.7 points from November. The September prices-paid result of 81.4 was this component's highest reading in the history of the overall service-sector index (inception in July of 1997). Thus, December's 69.5 remains a relatively high, expanding number and marked the 31st consecutive month of rising prices.
* For the 12 months ended December, the service-sector index's high was 65.0 (in August), and its low was 53.3 (in September). The 12-month average through December came in at 60.1, 0.3 points or 0.5% above the December 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 7.1 points or 11.9% above December'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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12/05 59.8 69.5 33% 7% 60%
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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*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:
* "We are seeing charges for 'fuel costs' added to bids and invoices." (Other Services).
* "Fuel and energy pricing remains erratic, dollar/euro exchange rate positive." (Finance & Banking).
* "Prices are fluctuating in many areas. Seeing price increases passed on now from firms that tried to hold the line on price increases earlier this year." (Public Administration).
Commodities Reported in Short Supply During December:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
Airline Tickets; Castings; Cement/Cement Products; Construction Labor (2); Copper/Copper Wire; Gasoline; Gypsum Products/Wallboard; Insulation; Reagents; Steel; Stretch Film; and Tomatoes.
Commodities Reported Up in Price During December:
Airfares (9); Aluminum; Asphalt/Asphalt Products (2); Beef/Beef Tenderloin (2); Chemicals/Chemical Reagents (3); Concrete; Construction Materials; Construction Services; Copper (28); Copper Products (various) (2); Corn; Corrugated (2); #1 Diesel Fuel (10); #2 Diesel Fuel* (12); Electricity; Freight Charges/Shipping Costs (6); Fuel* (25); Fuel-Related Surcharges (6); Gasoline* (25); #2 Heating Oil (4); Hotel Rates/Costs (13); Natural Gas (7); Paper/Paper Products (23); Plastics/Plastic Products (6); Plastic Bags; Poly Bags; Printing/Printed Materials; PVC (4); Sheetrock (Drywall, Gypsum Board) (2); Soybean Meal; Steel; Strapping; Telecom Products/Services (2); and Tomatoes.
Commodities Reported Down in Price During December:
Cheese; #2 Diesel Fuel; Fuel* (2); Gasoline* (3); Lumber --
Pine, and Treated (2); and Unleaded Gasoline (3).
*Reported as both up and down in price.
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