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Contact:

Kristina Cahill
Report On Business® Analyst
ISM®, ROB/Research Manager
Tempe, Arizona
480-752-6276, Ext. 3015
E-mail: kcahill@instituteforsupplymanagement.org

 


 

Services PMI® at 62%

December 2021 Services ISM® Report On Business®

Business Activity Index at 67.6%
New Orders Index at 61.5%
Employment Index at 54.9%
Supplier Deliveries Index at 63.9%

(Tempe, Arizona) — Economic activity in the services sector grew in December for the 19th month in a row — with the Services PMI® exceeding 60 percent for the 10th consecutive month — say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In December, the Services PMI® registered 62 percent, 7.1 percentage points below November’s all-time high reading of 69.1 percent. The Business Activity Index registered 67.6 percent, a decrease of 7 percentage points compared to the reading of 74.6 percent in November, and the New Orders Index registered 61.5 percent, 8.2 percentage points lower than the all-time high reading of 69.7 percent reported in November.

“The Supplier Deliveries Index registered 63.9 percent, 11.8 percentage points lower than the 75.7 percent that was reported in November. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index reached its third-highest reading ever at 82.5 percent, up 0.2 percentage point from the November figure of 82.3 percent. Services businesses continue to struggle replenishing inventories, as the Inventories Index (46.7 percent, down 1.5 percentage points from November’s reading of 48.2 percent) and the Inventory Sentiment Index (registering 38.3 percent, up 1.9 percentage points from November) stayed in contraction or ‘too low’ territory in December.”

Nieves continues, “According to the Services PMI®, 16 services industries reported growth. The composite index indicated growth for the 19th consecutive month after a two-month contraction in April and May 2020. Although there was a pullback for most of the indexes in December, the rate of growth remains strong for the services sector, which has expanded for all but two of the last 143 months. Business Survey Committee respondents have indicated that they continue to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials.”

INDUSTRY PERFORMANCE

The 16 services industries reporting growth in December — listed in order — are: Accommodation & Food Services; Wholesale Trade; Construction; Transportation & Warehousing; Management of Companies & Support Services; Retail Trade; Other Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Utilities; Professional, Scientific & Technical Services; Public Administration; Finance & Insurance; Information; Real Estate, Rental & Leasing; and Educational Services. The only industry reporting contraction in December is Mining.

WHAT RESPONDENTS ARE SAYING

  • “Supply chain challenges to procure supplies for our restaurants remains our greatest obstacle at present, along with staffing needs. We are considering another price increase after just one in 2021, in August.” [Accommodation & Food Services]
  • “Supply chain issues continue, but our business is adapting.” [Agriculture, Forestry, Fishing & Hunting]
  • “The escalation in costs for materials, fuel, labor, lodging and the like continues to negatively impact margins in an unsustainable direction.” [Construction]
  • “Higher than normal employee attrition within our own company and at our suppliers, which is causing disruptions and delays.” [Finance & Insurance]
  • "There is widespread fatigue across the organization as COVID-19 hospitalizations have plateaued, but in the face of yet another variant (omicron), the winter forecast is not positive. Although hospitalizations have eased, demand for services is up, as is acuity of patients. Due to mainly logistical concerns, the supply chain remains turbulent and some supply shortages, including of Vacutainers, are hindering operations. Our organization is cautiously optimistic going into flu season.” [Health Care & Social Assistance]
  • “Most upstream production materials are being pressured by constrained supply chains as well as domestic transportation challenges. Vendors are trying not to pass on expenses, but their margins are such that they will need to raise prices. While we have done a good job holding prices down, we will not be able to hold the vendors at bay. All (cost of goods) will be impacted.” [Information]
  • "Activity continues to maintain a steady pace. Inventory levels and outages are persistent with our suppliers; however, starting to see some relief in the supply chain, but not below the critical point yet. Prices continue to be driven up, with shipping costs the largest driver due to inflated pressures on capacity and fuel costs.” [Other Services]
  • “Electronic chip (shortage) is severely affecting deliveries from our supply base, thus impacting our ability to deliver to customers.” [Professional, Scientific & Technical Services]
  • “Long lead times, transportation bottlenecks, delivery inconsistency and price increases continue to affect a range of products.” [Retail Trade]
  • “We continue to experience supply chain disruptions across the nation and around the globe, resulting in raw material and subcomponent shortages, longer manufacturer lead times, transportation resource constraints, labor pool issues and significant price increases. Supply management continues to recommend pulling in demand, placing orders earlier than historical lead times for long lead-time materials, and qualifying secondary sources of supply (if applicable).” [Utilities]
  • “Demand is good, but supply chain issues continue to get worse. Trucking availability is worsening. Labor shortages are causing issues. We could do much more business if we had more people and access to more products.” [Wholesale Trade]

ISM® SERVICES SURVEY RESULTS AT A GLANCE COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS*
December 2021

  Services PMI® Manufacturing PMI®
Index Series Index Dec Series Index Nov Percent Point Change Direction Rate of Change Trend** (Months) Series Index Dec Series Index Nov Percent Point Change
Services PMI® 62.0 69.1 -7.1 Growing Slower 19 58.7 61.1 -2.4
Business Activity/ Production 67.6 74.6 -7.0 Growing Slower 19 59.2 61.5 -2.3
New Orders 61.5 69.7 -8.2 Growing Slower 19 60.4 61.5 -1.1
Employment 54.9 56.5 -1.6 Growing Slower 6 54.2 53.3 +0.9
Supplier Deliveries 63.9 75.7 -11.8 Slowing Slower 31 64.9 72.2 -7.3
Inventories 46.7 48.2 -1.5 Contracting Faster 7 54.7 56.8 -2.1
Prices 82.5 82.3 +0.2 Increasing Faster 55 68.2 82.4 -14.2
Backlog of Orders 62.3 65.9 -3.6 Growing Slower 12 62.8 61.9 +0.9
New Export Orders 61.5 57.9 +3.6 Growing Faster 11 53.6 54.0 -0.4
Imports 55.5 50.5 +5.0 Growing Faster 3 53.8 52.6 +1.2
Inventory Sentiment 38.3 36.4 +1.9 Too Low Slower 9 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 31.7 25.1 +6.6
Overall Economy Growing Slower 19
Services Sector Growing Slower 19

Services 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 Inventories indexes.
**Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

 

Commodities Up in Price


Aluminum Products; Chemicals (4); Chicken (4); Construction Contractors (6); Copper Products; Diesel Fuel (13); Electrical Components (11); Electronic Components; Food and Beverages; Freight (8); Fuel (12); Gasoline* (13); Labor (13); Labor — Construction (5); Labor — Technical (2); Metal Based Products; Paper Products; Personal Protection Equipment (PPE); Plastic Products (5); Polyvinyl Chloride (PVC) Products (4); Professional Services (2); Resin Based Products; Software; Steel (3); Steel Products* (12); Sulfuric Acid; Transformers; and Transportation Costs (3).

 

Commodities Down in Price


Dairy Products; Gasoline*; and Steel Products*.

 

Commodities in Short Supply


Appliances; Computer Equipment (5); Construction Contractors (4); Construction Materials (2); Construction Subcontractors (5); Crutches (3); Electronic Assemblies; Electronic Components; Labor (5); Labor — Temporary; Laptops and Desktop Computers (5); Microchips; Packaging; Pipette Tips (10); Plastic Products (2); Polyvinyl Chloride (PVC) Conduit; Steel Products (4); and Suction Canisters (2).

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates both up and down in price.

 


DECEMBER 2021 SERVICES INDEX SUMMARIES


SERVICES PMI®

In December, the Services PMI® registered 62 percent, a 7.1-percentage point decrease compared to the November figure of 69.1 percent. The 12-month average is 62.5 percent, which reflects strong and sustained demand in the services sector. The December reading indicates the services sector grew for the 19th consecutive month after two months of contraction and 122 months of growth before that. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

A Services PMI® above 49.2 percent, over time, generally indicates an expansion of the overall economy. Therefore, the December Services PMI® indicates expansion for a 19th straight month following two months of contraction and a preceding period of 127 months of growth. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for December (62 percent) corresponds to a 4.5-percent increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI® HISTORY

Month Services PMI®
Dec 2021 62.0
Nov 2021 69.1
Oct 2021 66.7
Sep 2021 61.9
Aug 2021 61.7
Jul 2021 64.1
Month Services PMI®
Jun 2021 60.1
May 2021 64.0
Apr 2021 62.7
Mar 2021 63.7
Feb 2021 55.3
Jan 2021 58.7

Average for 12 months - 62.5
High - 69.1
Low - 55.3


BUSINESS ACTIVITY

ISM®’s Business Activity Index registered 67.6 percent in December, a decrease of 7 percentage points from the all-time high mark of 74.6 percent in November, indicating growth for the 19th consecutive month. Comments from respondents include: “Increased demand for services” and “Business tends to pick up in the fourth quarter due to completing last-minute objectives and spending year-end cash.”

The 15 industries reporting an increase in business activity for the month of December — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Retail Trade; Wholesale Trade; Health Care & Social Assistance; Management of Companies & Support Services; Arts, Entertainment & Recreation; Construction; Other Services; Finance & Insurance; Real Estate, Rental & Leasing; Utilities; Information; Professional, Scientific & Technical Services; and Public Administration. The three industries reporting a decrease in December compared to November listed in order are: Mining; Agriculture, Forestry, Fishing & Hunting; and Educational Services.

Business Activity % Higher % Same % Lower Index
Dec 2021 34.5 56.1 9.4 67.6
Nov 2021 45.6 49.3 5.1 74.6
Oct 2021 42.5 52.3 5.2 69.8
Sep 2021 40.6 49.1 10.3 62.3

NEW ORDERS

ISM®’s New Orders Index registered 61.5 percent, down 8.2 percentage points from the all-time high reading of 69.7 registered in October and November. New orders grew for the 19th consecutive month after two months of contraction and a preceding period of 128 months of expansion. Comments from respondents include: “New customers added, which has led to greater sales orders and business activity” and “Increased customer activity related to infrastructure needs.”

Thirteen industries reported growth of new orders in December, in the following order: Construction; Accommodation & Food Services; Wholesale Trade; Transportation & Warehousing; Management of Companies & Support Services; Arts, Entertainment & Recreation; Other Services; Retail Trade; Health Care & Social Assistance; Finance & Insurance; Professional, Scientific & Technical Services; Utilities; and Public Administration. The three industries reporting a decrease in new orders in December are: Mining; Agriculture, Forestry, Fishing & Hunting; and Educational Services.

New Orders % Higher % Same % Lower Index
Dec 2021 30.8 54.5 14.7 61.5
Nov 2021 39.9 56.2 3.9 69.7
Oct 2021 43.6 47.7 8.7 69.7
Sep 2021 40.2 52.0 7.8 63.5

EMPLOYMENT

Employment activity in the services sector grew in December for the sixth consecutive month after contracting in June. ISM®’s Services Employment Index registered 54.9 percent in December, down 1.6 percentage points from the November reading of 56.5 percent. Comments from respondents include: “The ‘Great Resignation’ is hitting us, and we’re struggling to backfill positions in a timely manner. With fast food restaurants offering sign-on bonuses and high pay for lower-level jobs, we are having to relook at our policies and incentive programs” and “Not enough potential employees in the pipeline/employees leaving for other opportunities at higher wages.”

The 11 industries reporting an increase in employment in December — listed in order — are: Retail Trade; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Transportation & Warehousing; Wholesale Trade; Utilities; Educational Services; Public Administration; Construction; and Information. The three industries that reported a reduction in employment in December are: Mining; Finance & Insurance; and Health Care & Social Assistance.

Employment % Higher % Same % Lower Index
Dec 2021 30.1 47.9 22.0 54.9
Nov 2021 28.9 53.6 17.5 56.5
Oct 2021 25.7 52.9 21.4 51.6
Sep 2021 25.3 58.2 16.5 53.0

SUPPLIER DELIVERIES

The Supplier Deliveries Index registered 63.9 percent, down 11.8 percentage points from the 75.7 percent registered in November. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Port congestion continues to delay product deliveries” and “Shortage of raw materials is adding weeks to some orders.”

The 15 industries reporting slower deliveries in December — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Other Services; Construction; Health Care & Social Assistance; Mining; Wholesale Trade; Utilities; Educational Services; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Information; Public Administration; Transportation & Warehousing; and Finance & Insurance. No industries reported faster supplier deliveries in December.

Supplier Deliveries % Slower % Same % Faster Index
Dec 2021 36.4 55.0 8.6 63.9
Nov 2021 52.6 46.1 1.3 75.7
Oct 2021 52.6 46.1 1.3 75.7
Sep 2021 38.9 59.9 1.2 68.8

INVENTORIES

The Inventories Index contracted in December for the seventh consecutive month. The reading of 46.7 percent was a 1.5-percentage point decrease from the 48.2 percent reported in November. Of the total respondents in December, 42 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Longer supplier lead times are causing us to eat into inventory” and “Constraints continue to work down inventory.”

The six industries reporting an increase in inventories in December — listed in order — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Management of Companies & Support Services; Health Care & Social Assistance; and Wholesale Trade. The six industries reporting a decrease in inventories in December — listed in order — are: Real Estate, Rental & Leasing; Finance & Insurance; Educational Services; Construction; Information; and Professional, Scientific & Technical Services. Six industries reported no change in December compared to November.

Inventories % Higher % Same % Lower Index
Dec 2021 16.7 59.9 23.4 46.7
Nov 2021 22.1 52.2 25.7 48.2
Oct 2021 19.4 45.7 34.9 42.2
Sep 2021 18.6 55.1 26.3 46.1

PRICES

Prices paid by services organizations for materials and services increased in December for the 55th consecutive month, with the index registering 82.5 percent, 0.2 percentage point higher than November’s reading of 82.3 percent. This is the index’s third-highest reading; its all-time high is 83.5 percent (September 2005) with the second highest (82.9 percent) occurring two months ago in October.

All 18 services industries reported an increase in prices paid during the month of December, in the following order: Accommodation & Food Services; Mining; Management of Companies & Support Services; Other Services; Wholesale Trade; Utilities; Arts, Entertainment & Recreation; Construction; Educational Services; Information; Transportation & Warehousing; Public Administration; Real Estate, Rental & Leasing; Retail Trade; Finance & Insurance; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Agriculture, Forestry, Fishing & Hunting. No industries reported a decrease in prices paid in December.

Prices % Higher % Same % Lower Index
Dec 2021 57.4 41.1 1.5 82.5
Nov 2021 63.0 36.3 0.7 82.3
Oct 2021 66.2 32.6 1.2 82.9
Sep 2021 59.8 38.4 1.8 77.5
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

BACKLOG OF ORDERS

The ISM® Services Backlog of Orders Index grew in December for the 18th time in the last 19 months. The index registered 62.3 percent, a 3.6-percentage point decrease compared to the previous month’s reading of 65.9 percent. Of the total respondents in December, 37 percent indicated they do not measure backlog of orders. Respondent comments include: “Manufacturers report raw material shortages resulting in back orders; demand outpacing supply” and “Still with a steady backlog for various reasons and supply chain issues many are dealing with (extended lead times, slower logistics, pricing and the like).”

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

Backlog of Orders % Higher % Same % Lower Index
Dec 2021 35.4 53.8 10.8 62.3
Nov 2021 38.8 54.1 7.1 65.9
Oct 2021 38.6 57.3 4.1 67.3
Sep 2021 34.0 55.9 10.1 61.9

NEW EXPORT ORDERS

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew in December for the 11th consecutive month. The New Export Orders Index registered 61.5 percent, 3.6 percentage points higher than the 57.9 percent reported in November. Of the total respondents in December, 76 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The six industries reporting an increase in new export orders in December — listed in order — are: Construction; Real Estate, Rental & Leasing; Transportation & Warehousing; Retail Trade; Wholesale Trade; and Information. The five industries reporting a decrease in new export orders in December are: Mining; Utilities; Accommodation & Food Services; Educational Services; and Health Care & Social Assistance. Seven industries reported no change in exports orders.

New Export Orders % Higher % Same % Lower Index
Dec 2021 33.5 56.1 10.4 61.5
Nov 2021 20.9 73.9 5.2 57.9
Oct 2021 27.8 69.2 3.0 62.3
Sep 2021 24.2 70.7 5.1 59.5

IMPORTS

The Imports Index grew in December for the third consecutive month, as it registered 55.5 percent, 5 percentage points higher than November’s figure of 50.5 percent. Seventy-three 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 December are: Retail Trade; Transportation & Warehousing; Wholesale Trade; and Professional, Scientific & Technical Services. No industries reported a decrease in imports in December. Fourteen industries reported no change in imports in December.

Imports % Higher % Same % Lower Index
Dec 2021 20.6 69.7 9.7 55.5
Nov 2021 8.3 84.4 7.3 50.5
Oct 2021 20.8 64.9 14.3 53.3
Sep 2021 5.7 84.1 10.2 47.7

INVENTORY SENTIMENT

The ISM® Services Inventory Sentiment Index contracted in December for the ninth consecutive month, registering 38.3 percent, a 1.9-percentage point increase from November’s all-time low figure of 36.4 percent. This indicates that respondents feel their inventories are too low when correlated to business activity levels.

The four industries reporting sentiment that their inventories were too high in December are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Health Care & Social Assistance; and Wholesale Trade. The nine industries reporting a feeling that their inventories were too low in December — listed in order — are: Real Estate, Rental & Leasing; Accommodation & Food Services; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Educational Services; Professional, Scientific & Technical Services; Public Administration; Information; and Utilities.

Inventory Sentiment % Too High % About Right % Too Low Index
Dec 2021 11.5 53.7 34.8 38.3
Nov 2021 10.0 52.7 37.3 36.4
Oct 2021 12.3 49.9 37.8 37.3
Sep 2021 13.3 65.9 20.8 46.3

ABOUT THIS REPORT

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of December 2021.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

DATA AND METHOD OF PRESENTATION

The Services ISM® Report On Business® (formerly the Non-Manufacturing ISM® Report On Business®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry’s contribution to GDP. According to the BEA estimates for 2019 GDP (released December 22, 2020), the six largest services sectors are: Real Estate, Rental & Leasing; Government; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance. Beginning in February 2020 with January 2020 data, computation of the indexes is accomplished utilizing unrounded numbers.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI® above 49.2 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49.2 percent, it is generally declining. The distance from 50 percent or 49.2 percent is indicative of the strength of the expansion or decline.

The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

ISM ROB CONTENT

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Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@ismworld.org. Subject: Content Request.

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, Manufacturing PMI®, Services PMI®, and Hospital PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.



 

Services PMI® at 69.1%

November 2021 Services ISM® Report On Business®

Business Activity Index at 74.6%
New Orders Index at 69.7%
Employment Index at 56.5%
Supplier Deliveries Index at 75.7%

(Tempe, Arizona) - Economic activity in the services sector grew in November for the 18th month in a row — with the Services PMI® setting a record for the fifth time in 2021 — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In November, the Services PMI® registered another all-time high of 69.1 percent, 2.4 percentage points above October’s reading of 66.7 percent, the former all-time high. Previous records were set in March (63.7 percent), May (64 percent) and July (64.1 percent). The data quickly explains the elevated Services PMI® reading, as two of the four equally weighted subindexes that directly factor into the composite index set or tied all-time highs. The Business Activity Index reached 74.6 percent, an increase of 4.8 percentage points compared to the reading of 69.8 percent in October, and the New Orders Index registered 69.7 percent, the same reading as last month’s figure. (The other two subindexes are Employment and Supplier Deliveries; both also contributed positively to the Services PMI® in November.)

“The Supplier Deliveries Index registered 75.7 percent, the same reading as in October. The all-time high is 78.3 percent, recorded in April 2020. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“Demand continues to be strong, reflected by two other subindexes in November. The Backlog of Orders Index registered 65.9 percent, 1.4 percentage points lower than October’s all-time high reading of 67.3 percent. The Prices Index reached its third-highest reading ever at 82.3 percent, down 0.6 percentage point from the October figure of 82.9 percent. Services businesses continue to struggle replenishing inventories, as the Inventories Index (48.2 percent, up 6 percentage points from October’s reading of 42.2 percent) and the Inventory Sentiment Index (an all-time low of 36.4 percent, down 0.9 percentage point from the previous month’s figure of 37.3 percent) stayed in contraction or 'too low' territory in November.”

Nieves continues, “According to the Services PMI®, all 18 services industries reported growth. The composite index indicated growth for the 18th consecutive month after a two-month contraction in April and May 2020. In November, record growth continued for the services sector, which has expanded for all but two of the last 142 months. Demand continues to outpace supply that has been impacted by capacity constraints, shortages of labor and materials, and logistical challenges. This has also caused demand-pull inflation that is affecting overall business conditions.”

INDUSTRY PERFORMANCE

All 18 services industries reporting growth in November — listed in order — are: Real Estate, Rental & Leasing; Transportation & Warehousing; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Utilities; Wholesale Trade; Mining; Public Administration; Construction; Health Care & Social Assistance; Arts, Entertainment & Recreation; Other Services; Professional, Scientific & Technical Services; Finance & Insurance; Information; Educational Services; and Accommodation & Food Services. No industries are reporting contraction in November.

WHAT RESPONDENTS ARE SAYING

  • “Labor shortages, transportation delays and supply constraints/allocations.” [Accommodation & Food Services]
  • “Business is greater than in the past. Supply chain issues persist, but we’re evolving to overcome or manage them better than in the past.” [Agriculture, Forestry, Fishing & Hunting]
  • “Some food products that we have contracts on have been unavailable. Substitutes are always higher in cost.” [Arts, Entertainment & Recreation]
  • “Construction material shortages and longer lead times continue to hamper operations. Significant cost increases from labor and freight are forecast for the start of next year.” [Construction]
  • “As an institution of higher education, maintaining the safety, health and security of thousands of students, faculty and staff while allowing classes to continue in person and virtually has been a juggling act. We have been faced with multiple shortages on everything from personal protective equipment (PPE) to computers and peripherals, and vehicles. Shipments are taking longer and prices continue to climb, putting additional strain on (already) stressed budgets.” [Educational Services]
  • “Seeing inflationary forces in the marketplace, which is resulting in suppliers raising their prices moving into 2022.” [Finance & Insurance]
  • “COVID-19 patients continue to impact census and procedures. Supplies continue to be difficult to obtain at times.” [Health Care & Social Assistance]
  • “Suppliers continue to report that labor shortages are leading to production issues and delays. In some areas, sufficient raw materials and capacity exist, but labor is the gating factor. Continued inflationary pressures driven by the cost of fuel, shipping capacity constraints, and imbalances in supply and demand are impacting a broad spectrum of products.” [Management of Companies & Support Services]
  • “Late deliveries and shortages continue. Disruptions seem to be declining somewhat, as suppliers and customers are finding innovative ways to keep supplies moving.” [Public Administration]
  • “Continuing struggle with transportation capacity.” [Retail Trade]
  • “The COVID-19 surge, inventory shortages, driver and maintenance worker shortages, and long lead times for materials are straining our system. This limits our ability to keep vehicles on the road and necessary services running on schedule.” [Transportation & Warehousing]
  • “Inflation and supply chain issues have caused cost increases and stockouts, but sales continue to be strong, with a positive outlook for the next quarter and beyond.” [Wholesale Trade]

ISM® SERVICES SURVEY RESULTS AT A GLANCE COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS
November 2021

  Services PMI® Manufacturing PMI®
Index Series Index Nov Series Index Oct Percent Point Change Direction Rate of Change Trend** (Months) Series Index Nov Series Index Oct Percent Point Change
Services PMI® 69.1 66.7 +2.4 Growing Faster 18 61.1 60.8 +0.3
Business Activity/ Production 74.6 69.8 +4.8 Growing Faster 18 61.5 59.3 +2.2
New Orders 69.7 69.7 0.0 Growing Same 18 61.5 59.8 +1.7
Employment 56.5 51.6 +4.9 Growing Faster 5 53.3 52.0 +1.3
Supplier Deliveries 75.7 75.7 0.0 Slowing Same 30 72.2 75.6 -3.4
Inventories 48.2 42.2 +6.0 Contracting Slower 6 56.8 57.0 -0.2
Prices 82.3 82.9 -0.6 Increasing Slower 54 82.4 85.7 -3.3
Backlog of Orders 65.9 67.3 -1.4 Growing Slower 11 61.9 63.6 -1.7
New Export Orders 57.9 62.3 -4.4 Growing Slower 10 54.0 54.6 -0.6
Imports 50.5 53.3 -2.8 Growing Slower 2 52.6 49.1 +3.5
Inventory Sentiment 36.4 37.3 -0.9 Too Low Faster 8 N/A N/A N/A
Customers' Inventories N/A N/A N/A N/A N/A N/A 25.1 31.7 -6.6
Overall Economy Growing Faster 18
Services Sector Growing Faster 18

Services 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 Inventories indexes.
**Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

 

Commodities Up in Price


Aluminum (5); Bacon; Beef (3); Bread; Chemicals (3); Chicken (3); Chlorine; Computers and Peripherals; Construction Contractors (5); Copy Paper; Diesel Fuel (12); Electrical Components (10); Electronics (3); Freight (7); Fuel (11); Gasoline (12); Gloves; Labor (12); Labor — Construction (4); Labor — Technical; Labor — Temporary (11); Natural Gas (2); Packaging; Paper; Pipette Tips; Plastic Products (4); Polyvinyl Chloride (PVC) Products (3); Professional Services; Raw Materials; Software Maintenance and Support (2); Steel (2); Steel Products (11); and Transportation Costs (2).

 

Commodities Down in Price


Exam Gloves; and Lumber (5).

 

Commodities in Short Supply


Blood Collection Tubes (3); Computer Equipment (4); Construction Contractors (3); Construction Materials; Construction Subcontractors (4); Copper; Crutches (2); Electrical Components (3); Engine Components; Labor (4); Labor — Construction; Laptops and Desktop Computers (4); Paper Products (2); Plastic Pipe Fittings; Pipette Tips (9); Plastic Pipe (2); Plastic Pipe Fittings; Plastic Products; Polyvinyl Chloride (PVC); Steel Products (3); and Suction Canisters.

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

 


NOVEMBER 2021 SERVICES INDEX SUMMARIES

SERVICES PMI®


In November, the Services PMI® registered 69.1 percent, a 2.4-percentage point increase compared to the October figure of 66.7 percent. This is the highest reading since the inception of the index in 2008. The 12-month average is 62.1 percent, which reflects strong and sustained demand in the services sector. The November reading indicates the services sector grew for the 18th consecutive month after two months of contraction and 122 months of growth before that. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

A Services PMI® above 49.2 percent, over time, generally indicates an expansion of the overall economy. Therefore, the November Services PMI® indicates expansion for a 18th straight month following two months of contraction and a preceding period of 127 months of growth. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for November (69.1 percent) corresponds to a 6.9-percent increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI® HISTORY

Month Services PMI®
Nov 2021 69.1
Oct 2021 66.7
Sep 2021 61.9
Aug 2021 61.7
Jul 2021 64.1
Jun 2021 60.1
Month Services PMI®
May 2021 64.0
Apr 2021 62.7
Mar 2021 63.7
Feb 2021 55.3
Jan 2021 58.7
Dec 2020 57.7

Average for 12 months - 62.1
High - 69.1
Low - 55.3


BUSINESS ACTIVITY

ISM®’s Business Activity Index registered another all-time high of 74.6 percent in November, an increase of 4.8 percentage points over the previous mark of 69.8 percent in October, indicating growth for the 18th consecutive month. Comments from respondents include: “Order levels have increased, and we are learning to work with the randomly dynamic increasing lead times” and “Historical demand trend.”

The 16 industries reporting an increase in business activity for the month of November — listed in order — are: Management of Companies & Support Services; Retail Trade; Real Estate, Rental & Leasing; Transportation & Warehousing; Wholesale Trade; Health Care & Social Assistance; Utilities; Public Administration; Agriculture, Forestry, Fishing & Hunting; Other Services; Construction; Finance & Insurance; Information; Mining; Professional, Scientific & Technical Services; and Educational Services. No industry reported a decrease in November compared to October.

Business Activity % Higher % Same % Lower Index
Nov 2021 45.6 49.3 5.1 74.6
Oct 2021 42.5 52.3 5.2 69.8
Sep 2021 40.6 49.1 10.3 62.3
Aug 2021 31.2 54.3 14.5 60.1

NEW ORDERS

ISM®’s New Orders Index registered a record 69.7 percent, equaling the all-time high reading in October. New orders grew for the 18th consecutive month after two months of contraction and a preceding period of 128 months of expansion. Comments from respondents include: “Economic situation is getting better and supply chain is improving” and “Supply chain issues are creating anxiety in the marketplace, and clients are doing just-in-case buying instead of just-in-time.”

All 18 industries reported growth of new orders in November, in this order: Transportation & Warehousing; Retail Trade; Management of Companies & Support Services; Construction; Wholesale Trade; Mining; Health Care & Social Assistance; Public Administration; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Other Services; Real Estate, Rental & Leasing; Utilities; Finance & Insurance; Professional, Scientific & Technical Services; Accommodation & Food Services; Information; and Educational Services. No industries reported a decrease in new orders in November.

New Orders % Higher % Same % Lower Index
Nov 2021 39.9 56.2 3.9 69.7
Oct 2021 43.6 47.7 8.7 69.7
Sep 2021 40.2 52.0 7.8 63.5
Aug 2021 33.6 52.2 14.2 63.2

EMPLOYMENT

Employment activity in the services sector grew in November for the fifth consecutive month after contracting in June. ISM®’s Services Employment Index registered 56.5 percent in November, up 4.9 percentage points from the October reading of 51.6 percent. Comments from respondents include: “People are quitting to get paid more at different occupations” and “Increased business activity and customer demand requires more human resources.”

The 11 industries reporting an increase in employment in November — listed in order — are: Arts, Entertainment & Recreation; Retail Trade; Mining; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Transportation & Warehousing; Wholesale Trade; Utilities; Finance & Insurance; Educational Services; and Professional, Scientific & Technical Services. The four industries that reported a reduction in employment in November are: Management of Companies & Support Services; Accommodation & Food Services; Health Care & Social Assistance; and Construction.

Employment % Higher % Same % Lower Index
Nov 2021 28.9 53.6 17.5 56.5
Oct 2021 25.7 52.9 21.4 51.6
Sep 2021 25.3 58.2 16.5 53.0
Aug 2021 19.3 66.8 13.9 53.7

SUPPLIER DELIVERIES

The Supplier Deliveries Index registered 75.7 percent, the same figure as in October. For a second straight month, the index posted its second-highest reading, exceeded only by the record 78.3 percent registered in April 2020. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Shortages of raw materials (and) of delivery drivers” and “Longer lead times for transportation.”

The 17 industries reporting slower deliveries in November — listed in order — are: Real Estate, Rental & Leasing; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Construction; Utilities; Public Administration; Health Care & Social Assistance; Management of Companies & Support Services; Educational Services; Transportation & Warehousing; Retail Trade; Mining; Wholesale Trade; Information; Professional, Scientific & Technical Services; Other Services; and Finance & Insurance. No industries reported faster supplier deliveries in November.

Supplier Deliveries % Slower % Same % Faster Index
Nov 2021 52.6 46.1 1.3 75.7
Oct 2021 52.6 46.1 1.3 75.7
Sep 2021 38.9 59.9 1.2 68.8
Aug 2021 41.5 56.3 2.2 69.6

INVENTORIES

The Inventories Index contracted in November for the sixth consecutive month. The reading of 48.2 percent was a 6-percentage point increase from the 42.2 percent reported in October. Of the total respondents in November, 37 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Longer lead times affecting safety stock” and “Utilizing current inventories with slower replacements due to logistical challenges.”

The seven industries reporting an increase in inventories in November — listed in order — are: Arts, Entertainment & Recreation; Finance & Insurance; Accommodation & Food Services; Public Administration; Construction; Health Care & Social Assistance; and Utilities. The nine industries reporting a decrease in inventories in November — listed in order — are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Retail Trade; Transportation & Warehousing; Educational Services; Information; and Wholesale Trade.

Inventories % Higher % Same % Lower Index
Nov 2021 22.1 52.2 25.7 48.2
Oct 2021 19.4 45.7 34.9 42.2
Sep 2021 18.6 55.1 26.3 46.1
Aug 2021 14.8 64.1 21.1 46.9

PRICES

Prices paid by services organizations for materials and services increased in November, with the index registering 82.3 percent, 0.6 percentage point lower than October’s reading of 82.9 percent. This is the third-highest reading since September 2005, when the index reached its all-time high of 83.5 percent.

All 18 services industries reported an increase in prices paid during the month of November, in the following order: Mining; Transportation & Warehousing; Accommodation & Food Services; Utilities; Management of Companies & Support Services; Construction; Public Administration; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Wholesale Trade; Educational Services; Retail Trade; Health Care & Social Assistance; Information; Finance & Insurance; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; and Other Services. No industries reported a decrease in prices paid in November.

Prices % Higher % Same % Lower Index
Nov 2021 63.0 36.3 0.7 82.3
Oct 2021 66.2 32.6 1.2 82.9
Sep 2021 59.8 38.4 1.8 77.5
Aug 2021 51.2 47.6 1.2 75.4
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

BACKLOG OF ORDERS

The ISM® Services Backlog of Orders Index grew in November for the 17th time in the last 18 months. The index registered 65.9 percent, a 1.4-percentage point decrease compared to last month’s record reading of 67.3 percent. (The previous all-time high was 65.8 percent, set in June.) Of the total respondents in November, 38 percent indicated they do not measure backlog of orders.

The 13 industries reporting an increase in order backlogs in November — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Real Estate, Rental & Leasing; Retail Trade; Utilities; Health Care & Social Assistance; Construction; Wholesale Trade; Public Administration; Professional, Scientific & Technical Services; and Educational Services. The two industries that reported a decrease in backlogs in November are: Arts, Entertainment & Recreation; and Mining.

Backlog of Orders % Higher % Same % Lower Index
Nov 2021 38.8 54.1 7.1 65.9
Oct 2021 38.6 57.3 4.1 67.3
Sep 2021 34.0 55.9 10.1 61.9
Aug 2021 35.4 51.8 12.8 61.3

NEW EXPORT ORDERS

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew in November for the 10th consecutive month. The New Export Orders Index registered 57.9 percent, 4.4 percentage points lower than the 62.3 percent reported in October. Of the total respondents in November, 79 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The four industries reporting an increase in new export orders in November are: Real Estate, Rental & Leasing; Transportation & Warehousing; Wholesale Trade; and Health Care & Social Assistance. The three industries reporting a decrease in new export orders in November are Educational Services; Information; and Finance & Insurance. Eleven industries reported no change in exports orders.

New Export Orders % Higher % Same % Lower Index
Nov 2021 20.9 73.9 5.2 57.9
Oct 2021 27.8 69.2 3.0 62.3
Sep 2021 24.2 70.7 5.1 59.5
Aug 2021 22.8 75.6 1.6 60.6

IMPORTS

The Imports Index grew in November for the second consecutive month, as it registered 50.5 percent, 2.8 percentage points lower than October’s figure of 53.3 percent. Sixty-four 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 imports for the month of November are: Management of Companies & Support Services; Wholesale Trade; Educational Services; Utilities; and Health Care & Social Assistance. The four industries reporting a decrease in imports in November are: Real Estate, Rental & Leasing; Retail Trade; Information; and Accommodation & Food Services. Nine industries reported no change in imports in November.

Imports % Higher % Same % Lower Index
Nov 2021 8.3 84.4 7.3 50.5
Oct 2021 20.8 64.9 14.3 53.3
Sep 2021 5.7 84.1 10.2 47.7
Aug 2021 9.4 78.7 11.9 48.7

INVENTORY SENTIMENT

The ISM® Services Inventory Sentiment Index contracted in November for the eighth consecutive month, registering an all-time low of 36.4 percent, a 0.9-percentage point decrease from October’s figure of 37.3 percent. The previous record low of 37.2 percent was recorded in June 2021. This indicates that respondents feel their inventories are too low when correlated to business activity levels.

The six industries reporting sentiment that their inventories were too high in November — listed in order — are: Arts, Entertainment & Recreation; Mining; Finance & Insurance; Utilities; Accommodation & Food Services; and Health Care & Social Assistance. The eight industries reporting a feeling that their inventories were too low in November — listed in order — are: Real Estate, Rental & Leasing; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Public Administration; Educational Services; Wholesale Trade; and Information.

Inventory Sentiment % Too High % About Right % Too Low Index
Nov 2021 10.0 52.7 37.3 36.4
Oct 2021 12.3 49.9 37.8 37.3
Sep 2021 13.3 65.9 20.8 46.3
Aug 2021 12.5 57.8 29.7 41.4

ABOUT THIS REPORT

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of November 2021.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

DATA AND METHOD OF PRESENTATION

The Services ISM® Report On Business® (formerly the Non-Manufacturing ISM® Report On Business®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry’s contribution to GDP. According to the BEA estimates for 2019 GDP (released December 22, 2020), the six largest services sectors are: Real Estate, Rental & Leasing; Government; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance. Beginning in February 2020 with January 2020 data, computation of the indexes is accomplished utilizing unrounded numbers.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI® above 49.2 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49.2 percent, it is generally declining. The distance from 50 percent or 49.2 percent is indicative of the strength of the expansion or decline.

The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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Services PMI® at 60.1%

June 2021 Services ISM® Report On Businessâ

Business Activity Index at 60.4%

New Orders Index at 62.1%

Employment Index at 49.3%

Supplier Deliveries Index at 68.5%

(Tempe, Arizona) – Economic activity in the services sector grew in June for the 13th month in a row, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “The Services PMI registered 60.1 percent, which is 3.9 percentage points lower than May’s all-time high reading of 64 percent. The June reading indicates the 13th straight month of growth for the services sector, which has expanded for all but two of the last 137 months.

“The Supplier Deliveries Index registered 68.5 percent, down 1.9 percentage points from May’s reading of 70.4 percent. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Prices Index registered 79.5 percent, 1.1 percentage points lower than the May reading of 80.6 percent, indicating that prices increased in June, and at a slightly slower rate.

“According to the Services PMI®, 16 services industries reported growth. The composite index indicated growth for the 13th consecutive month after a two-month contraction in April and May 2020. The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month’s all-time high. Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions,” says Nieves.

INDUSTRY PERFORMANCE

The 16 services industries reporting growth in June — listed in order — are: Arts, Entertainment & Recreation; Other Services; Transportation & Warehousing; Wholesale Trade; Retail Trade; Management of Companies & Support Services; Accommodation & Food Services; Utilities; Mining; Construction; Health Care & Social Assistance; Public Administration; Information; Finance & Insurance; Educational Services; and Professional, Scientific & Technical Services. The two industries that reported a decrease in the month of June are Real Estate, Rental & Leasing; and Agriculture, Forestry, Fishing & Hunting.

WHAT RESPONDENTS ARE SAYING

  • “Our restaurants are quickly — maybe too quickly — returning to 2019 sales levels. Strong consumer demand for dining out is clearly evident as COVID-19 restrictions ease, but the challenges are supply chain outages, logistics delays and employee- and management-staffing constraints. Some locations cannot open for business or (have) limited hours, as we cannot staff the restaurant to meet consumer demand.” [Accommodation & Food Services]
  • “Severe supply chain disruptions and inflation are continuing in the marketplace, in all sectors.” [Arts, Entertainment & Recreation]
  • “COVID-19 continues to cause troubles for all of our deliveries, as well as short supply a lot of materials. (Shortages of) lumber, copper, and steel continue, which is driving up pricing and lead times.” [Construction]
  • “The declining positive test rates for COVID-19 is already having a significant impact, as virtually all aspects of our operations are picking up rapidly. The summer is normally the slow period, as limited teaching is taking place, but this year, preparations for the fall semester are already underway.” [Educational Services]
  • “New business is actively trending up locally, nationally and internationally.” [Finance & Insurance]
  • “We continue to see a high (patient) census as COVID-19 restrictions are eased, but the volumes are not pandemic related. There are more patients now because they wouldn’t or couldn’t get treatment because of restrictions on (non-COVID-19) care or personal cautiousness.” [Health Care & Social Assistance]
  • “Employees globally are returning to the office where possible. We expect to have most employees in the office starting in September.” [Information]
  • “Business conditions continue to rebound; however, like everywhere, the challenges in the supply chain are numerous. We continue to see cost increases, delayed shipments, pushed-out lead times, and no clarity as to when predictive balance returns to this market.” [Retail Trade]
  • “Labor market remains tight, and wages have risen at an unprecedented rate. We are expecting a long-term effect on pricing of services.” [Transportation & Warehousing]
  • “Overall business activity in the month has been strong. We are seeing increased orders and slight improvements in backlogs. The primary headwinds this month continue to be very expensive ocean freight rates, increasing business costs and increasing raw-materials costs. The top line is not outrunning expenses.” [Wholesale Trade]
  • “Starting to see a lot of commodity-price increases for chemicals, acidizing and cementing. This is driven by product cost increases stemming from low production from plants.” [Mining]

 

ISM® SERVICES SURVEY RESULTS AT A GLANCE

COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS

June 2021

Index

 Services PMI®

Manufacturing PMI®

Series Index

Jun

Series Index

May

Percent Point Change

 

 

Direction

 

Rate of Change

 

Trend**

(Months)

Series Index

Jun

Series Index

May

Percent Point Change

Services PMI®

60.1

64.0

-3.9

Growing

Slower

13

60.6

61.2

-0.6

Business Activity/

Production

60.4

66.2

-5.8

Growing

Slower

13

60.8

58.5

+2.3

New Orders

62.1

63.9

-1.8

Growing

Slower

13

66.0

67.0

-1.0

Employment

49.3

55.3

-6.0

Contracting

From Growing

1

49.9

50.9

-1.0

Supplier Deliveries

68.5

70.4

-1.9

Slowing

Slower

25

75.1

78.8

-3.7

Inventories

49.9

51.5

-1.6

Contracting

From Growing

1

51.1

50.8

+0.3

Prices

79.5

80.6

-1.1

Increasing

Slower

49

92.1

88.0

+4.1

Backlog of Orders

65.8

61.1

+4.7

Growing

Faster

6

64.5

70.6

-6.1

New Export Orders

50.7

60.0

-9.3

Growing

Slower

5

56.2

55.4

+0.8

Imports

58.2

50.4

+7.8

Growing

 

Faster

 

9

61.0

54.0

+7.0

Inventory Sentiment

37.2

40.5

-3.3

Too Low

Faster

3

N/A

N/A

N/A

Customers’ Inventories

N/A

N/A

N/A

N/A

N/A

N/A

30.8

28.0

+2.8

Overall Economy

Growing

Slower

13

 

Services Sector

Growing

Slower

13

 

Services 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 Inventories indexes.

Commodities Up in Price

Beef (2); Chicken (2); Construction Materials (4); Copper Wire (3); Diesel (7); Electrical Components (5); Engineered Wood Products; Food (2); Freight (2); Fuel (6); Gasoline (7); Insulation; Labor (7); Labor —Temporary (6); Lobster Tails; Lodging; Lumber (6); Metal Products (2); Natural Gas; Oriented Strand Board (OSB) (7); Packaging Materials (2); Pallets (2); Paper; Personal Protective Equipment (PPE)*; Plastic; Plastic Products (2); Polyvinyl Chloride (PVC) Products (10); Pork Products; Poultry; Stainless Steel Products; Steel (10); Steel Products (6); Tires; and Wood Pallets.

Commodities Down in Price

Exam Gloves; Gloves; Masks; Nitrile Gloves; and Personal Protective Equipment (PPE)*.

Commodities in Short Supply

Chicken (2); Chlorine; Computer Hardware (2); Electrical Components (3); Electronic Components (3); Gloves (7); Labor (2); Labor — Contingent; Labor — Temporary (6); Lumber (3); Lumber Products (2); Needles and Syringes (7); Nitrile Gloves (13); Pipette (4); Plastic Products; Polyvinyl Chloride (PVC); Polyvinyl Chloride (PVC) Products (5); Resin-Based Products (2); Steel Products (7); Vehicles (2); and Wood.

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates those commodities reported both up and down in price.

 

 

JUNE 2021 SERVICES INDEX SUMMARIES

Services PMI®

In June, the Services PMI® registered 60.1 percent, a 3.9-percentage point decrease compared to the May figure of 64 percent. This reading indicates the services sector grew for the 13th consecutive month after two months of contraction and 122 months of growth before that. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

A Services PMI® above 49.2 percent, over time, generally indicates an expansion of the overall economy. Therefore, the June Services PMI® indicates expansion for a 13th straight month following two months of contraction and a preceding period of 127 months of growth. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for June (60.1 percent) corresponds to a 3.8-percent increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI® HISTORY

 

Month

Services PMI®

Month

Services PMI®

Jun 2021

60.1

Dec 2020

57.7

May 2021

64.0

Nov 2020

56.8

Apr 2021

62.7

Oct 2020

56.2

Mar 2021

63.7

Sep 2020

57.2

Feb 2021

55.3

Aug 2020

57.2

Jan 2021

58.7

Jul 2020

56.6

Average for 12 months – 58.9

High – 64.0

Low – 55.3

 

Business Activity

ISM®’s Business Activity Index registered 60.4 percent in June, a decrease of 5.8 percentage points from the May reading of 66.2 percent. This represents growth for the 13th consecutive month. Comments from respondents include: “Increase in available restaurant capacity for in-location dining” and “Customers are ramping up their capital expenditures and awarding projects.”

The 16 industries reporting an increase in business activity for the month of June — listed in order — are: Arts, Entertainment & Recreation; Other Services; Management of Companies & Support Services; Utilities; Wholesale Trade; Transportation & Warehousing; Information; Retail Trade; Construction; Public Administration; Health Care & Social Assistance; Finance & Insurance; Accommodation & Food Services; Mining; Educational Services; and Professional, Scientific & Technical Services. The two industries reporting a decrease in business activity in June are Real Estate, Rental & Leasing; and Agriculture, Forestry, Fishing & Hunting.

Business Activity

%Higher

%Same

%Lower

Index

Jun 2021

39.1

46.3

14.5

60.4

May 2021

45.6

45.5

8.9

66.2

Apr 2021

46.0

48.3

5.7

62.7

Mar 2021

41.9

50.2

7.9

69.4

New Orders

ISM®’s New Orders Index registered 62.1 percent, a decrease of 1.8 percentage points from the May reading of 63.9 percent. New orders grew for the 13th consecutive month after two months of contraction and a preceding period of 128 months of expansion. Comments from respondents include: “More traffic at our locations, resulting in more service” and “Elective surgeries continuing to grow and fill the schedule.”

The 16 industries that reported growth of new orders in June — listed in order — are: Arts, Entertainment & Recreation; Management of Companies & Support Services; Transportation & Warehousing; Other Services; Wholesale Trade; Retail Trade; Accommodation & Food Services; Mining; Utilities; Health Care & Social Assistance; Information; Finance & Insurance; Public Administration; Educational Services; Professional, Scientific & Technical Services; and Construction. The only industry reporting a decrease in New Orders for the month of June is Agriculture, Forestry, Fishing & Hunting.

New Orders

%Higher

%Same

%Lower

Index

Jun 2021

42.0

43.8

14.2

62.1

May 2021

43.5

45.2

11.4

63.9

Apr 2021

45.1

48.9

6.0

63.2

Mar 2021

39.5

49.9

10.6

67.2

Employment

Employment activity in the services sector contracted in June after five consecutive months of growth. ISM®’s Services Employment Index registered 49.3 percent in June, down 6 percentage points from the May reading of 55.3 percent. Comments from respondents include: “Increasingly difficult to find qualified candidates to fill open positions” and “Employees have been somewhat slow to return to work, and there has been turnover as some pursue new opportunities in a hot job market.”

The 12 industries reporting an increase in employment in June — listed in order — are: Arts, Entertainment & Recreation; Retail Trade; Transportation & Warehousing; Other Services; Utilities; Finance & Insurance; Mining; Public Administration; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Construction. The two industries that reported a reduction in employment in June are Real Estate, Rental & Leasing; and Educational Services.

Employment

%Higher

%Same

%Lower

Index

Jun 2021

23.3

58.9

17.8

49.3

May 2021

27.2

58.4

14.4

55.3

Apr 2021

26.7

64.4

8.9

58.8

Mar 2021

22.6

66.3

11.1

57.2

Supplier Deliveries

The Supplier Deliveries Index registered 68.5 percent, which is 1.9 percentage points lower than the 70.4 percent reported in May. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Transportation shortages (and a) lack of drivers have slowed deliveries” and “Port congestion continues to delay product deliveries.”

The 17 industries reporting slower deliveries in June — listed in order — are: Accommodation & Food Services; Wholesale Trade; Construction; Other Services; Real Estate, Rental & Leasing; Educational Services; Retail Trade; Mining; Transportation & Warehousing; Utilities; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance; Public Administration; Professional, Scientific & Technical Services; Information; and Finance & Insurance.

No industries reported faster supplier deliveries in June.

Supplier Deliveries

%Slower

%Same

%Faster

Index

Jun 2021

39.9

57.1

3.0

68.5

May 2021

41.9

57.0

1.1

70.4

Apr 2021

36.4

59.6

4.1

66.1

Mar 2021

29.3

63.5

7.2

61.0

 

Inventories

The Inventories Index contracted in June after growing in May. The reading of 49.9 percent was a 1.6-percentage point decrease from the 51.5 percent reported in May. Of the total respondents in June, 35 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Inventories are low due to supplier and logistics delays” and “Utilizing current inventories due to slower replacements.”

The five industries reporting an increase in inventories in June are: Arts, Entertainment & Recreation; Wholesale Trade; Utilities; Transportation & Warehousing; and Professional, Scientific & Technical Services. The four industries reporting a decrease in inventories in June are: Management of Companies & Support Services; Public Administration; Health Care & Social Assistance; and Construction. Nine industries reported no change in inventories.

Inventories

%Higher

%Same

%Lower

Index

Jun 2021

26.3

47.2

26.5

49.9

May 2021

23.9

55.2

20.9

51.5

Apr 2021

20.1

58.1

21.8

49.1

Mar 2021

32.6

42.8

24.5

54.0

Prices

Prices paid by service organizations for materials and services increased in June, with the index registering 79.5 percent, 1.1 percentage points lower than May’s reading of 80.6 percent.

 

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

 

Prices

%Higher

%Same

%Lower

Index

Jun 2021

62.9

35.9

1.2

79.5

May 2021

65.9

33.5

0.5

80.6

Apr 2021

58.4

40.4

1.2

76.8

Mar 2021

52.0

47.0

1.0

74.0

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

Backlog of Orders

The ISM® Services Backlog of Orders Index grew in June for the 12th time in the last 13 months. The index registered 65.8 percent, 4.7 percentage points higher than the 61.1 percent reported in May. Of the total respondents in June, 37 percent indicated they do not measure backlog of orders.

 

The 14 industries reporting an increase in order backlogs in June — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Other Services; Retail Trade; Real Estate, Rental & Leasing; Wholesale Trade; Finance & Insurance; Management of Companies & Support Services; Health Care & Social Assistance; Public Administration; Utilities; Information; Professional, Scientific & Technical Services; and Educational Services. The four industries that reported a decrease in backlogs in June are Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; and Construction.

 

Backlog of Orders

%Higher

%Same

%Lower

Index

Jun 2021

35.4

60.7

3.9

65.8

May 2021

32.1

58.1

9.8

61.1

Apr 2021

21.9

67.7

10.4

55.7

Mar 2021

16.6

67.3

16.1

50.2

 

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew in June for the fifth consecutive month. The New Export Orders Index registered 50.7 percent in June, 9.3 percentage points lower than the 60 percent reported in May. Of the total respondents in June, 73 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

 

The six industries reporting an increase in new export orders in June — listed in order — are: Construction; Wholesale Trade; Retail Trade; Finance & Insurance; Information; and Professional, Scientific & Technical Services. The four industries reporting a decrease in exports in June are Real Estate, Rental & Leasing; Management of Companies & Support Services; Other Services; and Accommodation & Food Services. Eight industries reported no change in June.

 

New Export Orders

%Higher

%Same

%Lower

Index

Jun 2021

13.7

73.9

12.4

50.7

May 2021

25.0

70.0

5.0

60.0

Apr 2021

19.5

78.3

2.2

58.6

Mar 2021

17.9

75.0

7.0

55.5

 

Imports

The Imports Index grew at a faster rate in June, as it registered 58.2 percent, 7.8 percentage points higher than May’s figure of 50.4 percent. Sixty-six percent of respondents reported that they do not use, or do not track the use of, imported materials.

 

The seven industries reporting an increase in imports for the month of June — listed in order — are: Retail Trade; Other Services; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Educational Services; Wholesale Trade; and Information. The two industries reporting a decrease in imports in June are Accommodation & Food Services; and Professional, Scientific & Technical Services. Nine industries reported no change.

 

Imports

%Higher

%Same

%Lower

Index

Jun 2021

21.2

74.0

4.8

58.2

May 2021

15.4

70.0

14.6

50.4

Apr 2021

16.9

77.4

5.6

55.7

Mar 2021

10.1

81.1

8.7

50.7

 

Inventory Sentiment

The ISM® Services Inventory Sentiment Index contracted in June for the third consecutive month, registering 37.2 percent, which is 3.3 percentage points lower than May’s figure of 40.5 percent. This indicates that respondents feel that inventories are too low when correlated to their level of business.

 

The four industries reporting sentiment that their inventories were too high in June are Finance & Insurance; Utilities; Health Care & Social Assistance; and Construction. The eight industries reporting a feeling that their inventories were too low in June — listed in order — are: Real Estate, Rental & Leasing; Accommodation & Food Services; Public Administration; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Transportation & Warehousing; and Retail Trade. Six industries reported no change in inventory sentiment.

 

Inventory Sentiment

%Too

High

%About Right

%Too

Low

Index

Jun 2021

8.6

57.2

34.2

37.2

May 2021

13.0

55.0

32.0

40.5

Apr 2021

9.7

74.2

16.1

46.8

Mar 2021

16.8

71.7

11.5

52.7

 

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of June 2021.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

 

Data and Method of Presentation

The Services ISM® Report On Business® (formerly the Non-Manufacturing ISM® Report On Business®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI® above 49.2 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49.2 percent, it is generally declining. The distance from 50 percent or 49.2 percent is indicative of the strength of the expansion or decline.

The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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