Tempe, Arizona - Economic activity in the non-manufacturing sector grew in February for the 15th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee. "The NMI registered 59.7 percent in February, 0.3 percentage point higher than the 59.4 percent registered in January, and indicating continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 2.3 percentage points to 66.9 percent, reflecting growth for the 19th consecutive month and at a faster rate than in January. The New Orders Index decreased 0.5 percentage point to 64.4 percent, and the Employment Index increased 1.1 percentage points to 55.6 percent, indicating growth in employment for the sixth consecutive month and at a faster rate. The Prices Index increased 1.2 percentage points to 73.3 percent, indicating that prices increased at a faster rate in February. According to the NMI, 13 non-manufacturing industries reported growth in February. Respondents' comments overall are mostly positive about business conditions and the direction of the economy."

INDUSTRY PERFORMANCE (Based on the NMI)

The 13 industries reporting growth in February based on the NMI composite index - listed in order - are: Real Estate, Rental & Leasing; Accommodation & Food Services; Mining; Utilities; Professional, Scientific & Technical Services; Educational Services; Transportation & Warehousing; Finance & Insurance; Other Services; Public Administration; Wholesale Trade; Management of Companies & Support Services; and Retail Trade. The five industries reporting contraction in February are: Agriculture, Forestry, Fishing & Hunting; Construction; Health Care & Social Assistance; Arts, Entertainment & Recreation; and Information.
WHAT RESPONDENTS ARE SAYING ...

- "Business started picking up late last year and appears to be sustaining that level through the beginning of 2011." (Professional, Scientific & Technical Services)
- "Business environment is generally improving." (Management of Companies & Support Services)
- "We are seeing strength in our business both from the perspective of new business and expansion with our existing customers." (Finance & Insurance)
- "Strong demand; capacity crunch all around." (Transportation & Warehousing)
- "Major uptick in business activities." (Accommodation & Food Services)
- "Commodities are once again putting significant pressure on prices and capacity." (Retail Trade)

COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price

Airfares (3); Beef; Cable Products; Capital Equipment; Carbon Pipe (2); Coffee; Consulting Services; Contract Labor; Copper; Copper Products (3); Cotton (4); Cotton Products (6); Dairy; #1 Diesel Fuel (5); #2 Diesel Fuel (8); Electrical Supplies; Energy; Fiber Optic Cables; Flour; Food and Beverage (2); Fuel (14); Fuel Surcharges (2); Gasoline (5); Janitorial Supplies (2); Large Bore Bearings; Latex Gloves (2); Lettuce; Paper (4); Paper Bags; Petroleum Products (2); Plastic Film (2); Plywood; Polyester; Polyethylene Bags (3); Polyethylene; Polypropylene; Professional Services; Services Labor; Steel (3); Steel Products (3); and Trucks.
Commodities Down in Price

Computer Supplies; and Janitorial Services.
Commodities in Short Supply

Cotton (2); Cotton Products (2); and Electrical Components.

Note: The number of consecutive months the commodity is listed is indicated after each item.

FEBRUARY 2011 NON-MANUFACTURING INDEX SUMMARIES
NMI

In February, the NMI registered 59.7 percent, indicating continued growth in the non-manufacturing sector for the 15th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

Business Activity

ISM's Non-Manufacturing Business Activity Index in February registered 66.9 percent, an increase of 2.3 percentage points when compared to the 64.6 percent registered in January. Thirteen industries reported increased business activity, and four industries reported decreased activity for the month of February. One industry reported no change from January. Comments from respondents include: "Capital projects moved from inactive to active" and "Award of long-awaited contracts."

The industries reporting growth of business activity in February - listed in order - are: Real Estate, Rental & Leasing; Accommodation & Food Services; Utilities; Educational Services; Professional, Scientific & Technical Services; Public Administration; Mining; Finance & Insurance; Wholesale Trade; Transportation & Warehousing; Management of Companies & Support Services; Other Services; and Information. The industries reporting decreased business activity in February are: Construction; Health Care & Social Assistance; Arts, Entertainment & Recreation; and Retail Trade.

New Orders

ISM's Non-Manufacturing New Orders Index grew in February for the 19th consecutive month. The index registered 64.4 percent, which is a decrease of 0.5 percentage point from the 64.9 percent reported in January. Comments from respondents include: "Market share gains and economy" and "Business is growing."

The 11 industries reporting growth of new orders in February - listed in order - are: Real Estate, Rental & Leasing; Accommodation & Food Services; Utilities; Educational Services; Mining; Professional, Scientific & Technical Services; Other Services; Transportation & Warehousing; Public Administration; Finance & Insurance; and Wholesale Trade. The three industries reporting contraction of new orders in February are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; and Retail Trade.

Employment

Employment activity in the non-manufacturing sector grew in February, as ISM's Non-Manufacturing Employment Index registered 55.6 percent. This reflects an increase of 1.1 percentage points when compared to the 54.5 percent registered in January. Nine industries reported increased employment, five industries reported decreased employment, and four industries reported unchanged employment compared to January. Comments from respondents include: "Starting to fill positions reduced from 2009/2010 season" and "To handle the new influx of sales and sales activity."

The industries reporting an increase in employment in February - listed in order - are: Mining; Accommodation & Food Services; Transportation & Warehousing; Management of Companies & Support Services; Other Services; Retail Trade; Finance & Insurance; Professional, Scientific & Technical Services; and Wholesale Trade. The industries reporting a reduction in employment in February are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Construction; Information; and Public Administration.

Supplier Deliveries

The Supplier Deliveries Index registered 52 percent in February, 1.5 percentage points lower than the 53.5 percent registered in January, indicating that supplier deliveries continued to slow in February, but at a slower rate. A reading above 50 percent indicates slower deliveries.

The eight industries reporting slower deliveries in February - listed in order - are: Real Estate, Rental & Leasing; Mining; Arts, Entertainment & Recreation; Retail Trade; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Finance & Insurance. The only industry reporting faster supplier deliveries in February is Agriculture, Forestry, Fishing & Hunting. Nine industries reported no change in supplier deliveries for the month of February.

Inventories

ISM's Non-Manufacturing Inventories Index registered 55.5 percent in February, indicating that inventory levels grew in February after one month of contraction. Of the total respondents in February, 27 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Inventory levels are now where they should be" and "Buying ahead of price increases."

The eight industries reporting an increase in inventories in February - listed in order - are: Utilities; Wholesale Trade; Real Estate, Rental & Leasing; Other Services; Management of Companies & Support Services; Accommodation & Food Services; Transportation & Warehousing; and Professional, Scientific & Technical Services. The six industries reporting decreases in inventories in February - listed in order - are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Public Administration; Finance & Insurance; Information; and Retail Trade.

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in February. ISM's Non-Manufacturing Prices Index for February registered 73.3 percent, 1.2 percentage points higher than the 72.1 percent reported in January. In February, the percentage of respondents reporting higher prices is 46 percent, the percentage indicating no change in prices paid is 50 percent, and 4 percent of the respondents reported lower prices.

In February, 17 industries reported an increase in prices paid, in the following order: Construction; Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Arts, Entertainment & Recreation; Educational Services; Retail Trade; Wholesale Trade; Information; Mining; Other Services; Transportation & Warehousing; Professional, Scientific & Technical Services; Utilities; Health Care & Social Assistance; Finance & Insurance; and Public Administration. The only industry reporting prices as decreasing for the month of February is Agriculture, Forestry, Fishing & Hunting.

Backlog of Orders

ISM's Non-Manufacturing Backlog of Orders Index grew in February for the second consecutive month. The index registered 52 percent, 1.5 percentage points higher than the 50.5 percent reported in January. Of the total respondents in February, 42 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in February - listed in order - are: Educational Services; Management of Companies & Support Services; Information; Construction; Finance & Insurance; Professional, Scientific & Technical Services; and Transportation & Warehousing. The two industries reporting lower backlog of orders in February are: Utilities and Public Administration.

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the United States by domestically based personnel grew at a faster rate in February. The New Export Orders Index for February registered 56.5 percent, which is 3 percentage points higher than the 53.5 percent registered in January. Of the total respondents in February, 63 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The six industries reporting an increase in new export orders in February - listed in order - are: Agriculture, Forestry, Fishing & Hunting; Information; Accommodation & Food Services; Retail Trade; Transportation & Warehousing; and Professional, Scientific & Technical Services. The two industries reporting a decrease in export orders in February are: Arts, Entertainment & Recreation; and Wholesale Trade. Four industries reported no change in new export orders for the month of February.

Imports

The ISM Non-Manufacturing Imports Index grew in February for the seventh consecutive month. The index registered 53.5 percent, which is the same as reported in January. In February, 58 percent of respondents reported that they do not use, or do not track, the use of imported materials.

The five industries reporting an increase in the use of imports in February are: Educational Services; Information; Accommodation & Food Services; Professional, Scientific & Technical Services; and Retail Trade. The four industries reporting a decrease in imports for the month of February are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Other Services; and Wholesale Trade. Seven industries reported no change in imports for the month of February.

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in February registered 57.5 percent, which is 2.5 percentage points lower than the 60 percent reported in January. This indicates that respondents believe their inventories are too high at this time. In February, 23 percent of respondents said their inventories were too high, 8 percent said their inventories were too low, and 69 percent said their inventories were about right.

The five industries reporting a feeling that their inventories are too high in February are: Management of Companies & Support Services; Wholesale Trade; Other Services; Finance & Insurance; and Health Care & Social Assistance. The three industries reporting that inventories are too low in February are: Public Administration; Professional, Scientific & Technical Services; and Construction.