NMI® at 52.9%; May Non-Manufacturing ISM® Report On Business®; Business Activity Index at 55.1%; New Orders Index at 54.2%; Employment Index at 49.7%

TEMPE, Ariz., June 3, 2016 /PRNewswire/ -- Economic activity in the non-manufacturing sector grew in May for the 76th 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, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management^® (ISM^®) Non-Manufacturing Business Survey Committee. "The NMI^® registered 52.9 percent in May, 2.8 percentage points lower than the April reading of 55.7 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 55.1 percent, 3.7 percentage points lower than the April reading of 58.8 percent, reflecting growth for the 82nd consecutive month, at a slower rate in May. The New Orders Index registered 54.2 percent, 5.7 percentage points lower than the reading of 59.9 percent in April. The Employment Index decreased 3.3 percentage points to 49.7 percent from the April reading of 53 percent and indicates contraction after two consecutive months of growth. The Prices Index increased 2.2 percentage points from the April reading of 53.4 percent to 55.6 percent, indicating prices increased in May for the second consecutive month. According to the NMI^®, 14 non-manufacturing industries reported growth in May. Respondents' comments are mixed and vary by industry and company. Overall, the report reflects a cooling-off and slowing in momentum from the previous months of growth for the non-manufacturing sector."

INDUSTRY PERFORMANCE
The 14 non-manufacturing industries reporting growth in May — listed in order — are: Health Care & Social Assistance; Accommodation & Food Services; Utilities; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Construction; Public Administration; Real Estate, Rental & Leasing; Management of Companies & Support Services; Information; Finance & Insurance; Retail Trade; Transportation & Warehousing; and Arts, Entertainment & Recreation. The four industries reporting contraction in May are: Mining; Other Services; Educational Services; and Professional, Scientific & Technical Services.

WHAT RESPONDENTS ARE SAYING ...

• "Outlook remains strong, with steady pricing, strong demand, and new expansion in the pipeline." (Accommodation & Food Services)
• "Projects from the oil companies are becoming less and less. Budget problems for capital projects." (Construction)
• "There has been a general slowing-down from the momentum we saw last month." (Professional, Scientific & Technical Services)
• "Slower start to the second quarter." (Arts, Entertainment & Recreation)
• "Holding steady. No real increase, but expansion plans on for late Q3 or Q4 in preparation for 2017." (Finance & Insurance)
• "Continued growth in the sector." (Transportation & Warehousing)
• "Pending labor concerns to replace an aging workforce of highly-skilled staff support positions." (Educational Services)
• "High pressure on cost reduction due to declining top line sales." (Retail Trade)
• "Significant drop in shipments for the month. Estimate a decline of nine percent for the markets we serve. Overall retail traffic has slowed. Pricing has stabilized in the market." (Wholesale Trade)

*Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.
**Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Advertising; Airline Tickets; Bacon; Computer Components; #1 Diesel Fuel (2); Diesel (2); Fuel (2); Gasoline (3); Gypsum; Labor (13); Lumber Products (3); Paper (4); Produce (2); Resin-Based Products (2); and Salmon.

Commodities Down in Price
Beef (2); Copper Products; Dairy; Eggs (3); and Steel Products.

Commodities in Short Supply
Construction Labor (2); Fiber Optic Cable; Labor (8); Sterile Medical Fluids; Temporary Labor; Vanilla Beans; and Vanilla Products.

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

MAY 2016 NON-MANUFACTURING INDEX SUMMARIES

NMI^®
In May, the NMI^® registered 52.9 percent, a decrease of 2.8 percentage points when compared to April's reading of 55.7 percent, indicating continued growth in the non-manufacturing sector for the 76th 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.

An NMI^® above 48.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the May NMI^® indicates growth for the 82nd consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 76th consecutive month. Nieves stated, "The past relationship between the NMI^® and the overall economy indicates that the NMI^® for May (52.9 percent) corresponds to a 1.6 percent increase in real gross domestic product (GDP) on an annualized basis."

NMI^® HISTORY

Business Activity
ISM^®'s Business Activity Index in May registered 55.1 percent, a decrease of 3.7 percentage points from April's reading of 58.8 percent. This represents growth in business activity for the 82nd consecutive month. Eleven industries reported increased business activity and four industries reported decreased activity for the month of May. Comments from respondents include: "Slower retail sales" and "Increased capital improvement programs activity."

The 11 industries reporting growth of business activity in May — listed in order — are: Health Care & Social Assistance; Utilities; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Accommodation & Food Services; Public Administration; Retail Trade; Wholesale Trade; Transportation & Warehousing; and Information. The four industries reporting a decrease in business activity in May are: Mining; Other Services; Arts, Entertainment & Recreation; and Professional, Scientific & Technical Services.

New Orders
ISM^®'s Non-Manufacturing New Orders Index registered 54.2 percent, a decrease of 5.7 percentage points from the April reading of 59.9 percent. May represents growth in new orders for the 82nd consecutive month and at a much slower rate compared to April. Comments from respondents include: "Awarded projects from earlier in the year" and "Adding programs and expansion."

The 11 industries reporting growth of new orders in May — listed in order — are: Health Care & Social Assistance; Utilities; Wholesale Trade; Construction; Public Administration; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Transportation & Warehousing; Finance & Insurance; Management of Companies & Support Services; and Retail Trade. The three industries reporting contraction of new orders in May are: Mining; Other Services; and Professional, Scientific & Technical Services.

Employment
Employment activity in the non-manufacturing sector contracted in May after two consecutive months of growth. ISM^®'s Non-Manufacturing Employment Index registered 49.7 percent, which reflects a decrease of 3.3 percentage points when compared to April's reading of 53 percent. Eleven industries reported increased employment, and six industries reported decreased employment. Comments from respondents include: "Company continues to ramp-down full time employees" and "Some people left and were not back-filled. Attrition."

The 11 industries reporting an increase in employment in May — listed in order — are: Construction; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Accommodation & Food Services; Wholesale Trade; Transportation & Warehousing; Management of Companies & Support Services; Public Administration; Information; and Retail Trade. The six industries reporting a reduction in employment in May — listed in order —  are: Educational Services; Other Services; Mining; Utilities; Professional, Scientific & Technical Services; and Finance & Insurance.

Supplier Deliveries
Supplier deliveries were slower in May for the fifth consecutive month. The index registered 52.5 percent, which is 1.5 percentage points higher than the 51 percent that was registered in April. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Trucking issues" and "Factory backlogs continue to build. Few suppliers adding capacity at this time."

The nine industries reporting slower deliveries in May — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Utilities; Information; Accommodation & Food Services; Wholesale Trade; Construction; Professional, Scientific & Technical Services; and Public Administration. The two industries reporting faster deliveries in May are: Transportation & Warehousing; and Finance & Insurance. Seven industries reported no change in supplier deliveries in May compared to April.

Inventories
ISM^®'s Non-Manufacturing inventories grew for the 14th consecutive month and registered 54 percent in May, which is the same percent that was reported in April. Of the total respondents in May, 30 percent indicated they do not have inventories, or do not measure them. Comments from respondents include: "The increase in sales activity has lowered available stock" and "Sales are below expectations."

The eight industries reporting an increase in inventories in May — listed in order — are: Utilities; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Professional, Scientific & Technical Services; Public Administration; Accommodation & Food Services; Wholesale Trade; and Retail Trade. The four industries reporting decreases in inventories in May are: Educational Services; Other Services; Health Care & Social Assistance; and Information. Six industries reported no change in inventories in May compared to April.

Prices
Prices paid by non-manufacturing organizations for purchased materials and services increased in May for the second consecutive month. ISM^®'s Non-Manufacturing Prices Index for May registered 55.6 percent, 2.2 percentage points higher than the 53.4 percent reported in April. The proportion of respondents reporting higher prices is 24 percent, 69 percent indicated no change in prices paid, and 7 percent of the respondents reported lower prices.

The nine non-manufacturing industries reporting an increase in prices paid during the month of May — listed in order — are: Utilities; Wholesale Trade; Construction; Health Care & Social Assistance; Finance & Insurance; Professional, Scientific & Technical Services; Public Administration; Retail Trade; and Transportation & Warehousing. The four industries reporting a decrease in prices paid for the month of May are: Mining; Management of Companies & Support Services; Information; and Agriculture, Forestry, Fishing & Hunting.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
ISM^®'s Non-Manufacturing Backlog of Orders Index indicates order backlogs were unchanged in May. The index registered 50 percent, which is 1.5 percentage points lower than the 51.5 percent reported in April. Of the total respondents in May, 37 percent indicated they do not measure backlog of orders.

The five industries reporting an increase in order backlogs in May are: Utilities; Arts, Entertainment & Recreation; Information; Construction; and Public Administration. The seven industries reporting a decrease in order backlogs in May — listed in order — are: Mining; Other Services; Health Care & Social Assistance; Management of Companies & Support Services; Professional, Scientific & Technical Services; Wholesale Trade; and Retail Trade.

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 contracted in May for the second time in the last five months. The New Export Orders Index for May registered 49 percent, which is 7.5 percentage points lower than the 56.5 percent reported in April. Of the total respondents in May, 69 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The four industries reporting an increase in new export orders in May are: Health Care & Social Assistance; Construction; Information; and Retail Trade. The five industries reporting a decrease in new export orders in May are: Arts, Entertainment & Recreation; Finance & Insurance; Mining; Wholesale Trade; and Professional, Scientific & Technical Services. Seven industries reported no change in new export orders in May compared to April.

Imports
Imports of raw materials grew in May for the fourth consecutive month. This month's reading at 53.5 percent is 0.5 percentage point lower than the reading of 54 percent reported in April. Fifty-eight percent of respondents reported that they do not use, or do not track the use of, imported materials.

The four industries reporting an increase in imports for the month of May are: Health Care & Social Assistance; Wholesale Trade; Accommodation & Food Services; and Construction. The only industry reporting a decrease in imports for the month of May is Public Administration. Twelve industries reported no change in imports in May compared to April.