Summary
Earlier today, the Institute for Supply management reported that its January service-sector index came in at 56.8, versus a revised December reading of 61.0. January's price component was unchanged at 67.2, a level that remains high by historical standards.
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* The Institute for Supply Management released results for its service-sector index this morning, covering activity during January. The index came in at a reading of 56.8, compared with December's revised 61.0.
(NOTE: With this report, ISM has incorporated a revised set of seasonal-adjustment factors from the Commerce Department. All past data discussed or shown in this missive are adjusted for these revisions.)
* In January of 2005, this index stood at 60.3, 3.5 points or 6.2% above January 2006.
* The consensus estimate was looking for a January 2006 result of around 60.0. Thus, the actual number was materially below expectations.
* The January performance of selected components:
Prices Paid 0.0 to 67.2
Inventories -1.0 to 55.0
Backlog of Orders -1.5 to 52.5
Supplier Deliveries -2.0 to 54.5 (= slower)
Employment -5.8 to 51.1
New Orders -6.2 to 56.0
(NOTE: Overall index and sub-index readings above 50.0 indicate expansion; readings below 50.0 indicate contraction.)
* The index's price component was unchanged from December, at 67.2. The September price result of 78.4 was this component's highest reading in the history of the overall service-sector index (inception in July of 1997). Thus, January's 67.2 remains a relatively high, expanding number. In addition, it marked the 46th consecutive month of rising prices.
* For the 12 months ended January, the service-sector index's high was 64.8 (August 2005), and its low was 53.7 (September 2005). The 12-month average through January was 59.8, 3.0 points or 5.3% above the January 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 65.9, occurring in April of 2004. This was 9.1 points or 16.0% above January'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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01/06 56.8 67.2 37% 4% 59%
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12/05 61.0 67.2 33% 7% 60%
11/05 59.3 70.8 44% 8% 48%
10/05 59.2 74.1 54% 5% 41%
09/05 53.7 78.4* 58% 2% 40%
08/05 64.8 67.2 36% 6% 58%
07/05 60.4 69.5 39% 3% 58%
06/05 61.1 61.6 27% 5% 68%
05/05 59.2 62.4 27% 5% 68%
04/05 60.4 64.1 41% 2% 57%
03/05 61.8 65.9 43% 1% 56%
02/05 60.4 67.0 43% 3% 54%
01/05 60.3 66.8 37% 4% 59%
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12/04 65.5 71.6 38% 5% 57%
11/04 62.8 70.2 38% 4% 58%
10/04 60.6 70.9 44% 3% 53%
09/04 58.7 66.5 35% 3% 53%
08/04 59.3 70.3 40% 4% 56%
07/04 63.1 71.6 45% 5% 50%
06/04 59.9 74.8 52% 3% 45%
05/04 64.3 77.2 55% 3% 42%
04/04 65.9 68.5 53% 3% 44%
03/04 62.7 64.8 43% 3% 54%
02/04 61.3 58.1 31% 9% 60%
01/04 65.6 60.9 26% 4% 70%
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*Highest reading in the series' history.
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* Following are some comments from the "What Respondents Are Saying" section of today's ISM report:
* "Economy - business is good, consumer trading down" (Retail Trade).
* "The oil industry continues to have a profound impact on all commodities either in production or the delivery process. Fluctuations will continue until oil stabilizes" (Public Administration).
* "We experienced a season[al] trend slowdown in our level of business activity and in our level of professionals working at a client site" (Business Services).
* "Interest rate increases taking effect together with higher energy costs beginning to materially impact consumer spending" (Finance & Banking).
Commodities Reported in Short Supply During January:
(NOTE: The number of consecutive months the commodity is listed is indicated after each item.)
Drywall; Roofing Materials; and Stretch Film.
Commodities Reported Up in Price During January:
Airfares (10); Aluminum (2); Asphalt/Asphalt Products (3); Batteries - Automotive and Other; Beef* (3); Cement; Concrete (2); Copper (29); Copper Products (various) (3); Corn (2); Corrugated (3); #1 Diesel Fuel (11); #2 Diesel Fuel (13); Electricity (2); Freight Charges (7); Fuel (26); Gasoline* (26); Lumber -Pine, Spruce and Treated; Metals; Natural Gas (8); Office Supplies; Paper (24); Petroleum; Petroleum Goods/Products; Plastics/Plastic Products (7); Plastic Bags (2); Postal Rates; Rental Vehicles; Roofing Materials*; Soybean Meal (2); Steel/Steel Products (2); Tomatoes (2); and Unleaded Gasoline.
Commodities Reported Down in Price During January:
Beef*; Gasoline*; Memory/Memory Products; Poultry; Roofing Materials*; and Seafood/Shrimp.
*Reported as both up and down in price.
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