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NMI (Non-Manufacturing Index) at 50.6%; August Non-Manufacturing ISM Report On Business(R); Business Activity Index at 51.6%; New Orders Index at 49.7%; Employment Index at 45.4%

TEMPE, Ariz.-(Business Wire)-September 4, 2008 - Economic activity in the non-manufacturing sector grew in August, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business^®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Hotels Corporation. “The NMI (Non-Manufacturing Index) increased 1.1 percentage points in August to 50.6 percent, indicating growth after two months of contraction in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 2 percentage points to 51.6 percent. The New Orders Index increased 1.8 percentage points to 49.7 percent, and the Employment Index decreased 1.7 percentage points to 45.4 percent. The Prices Index decreased 7.9 percentage points to 72.9 percent in August, indicating a slower rate in price increases than in July. According to the NMI, 10 non-manufacturing industries reported growth in August. Respondents’ comments remain mixed about business conditions and reflect concern about the uncertainty of the economy.”

INDUSTRY PERFORMANCE (Based on the NMI)

The 10 industries reporting growth in August based on the new NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Mining; Health Care & Social Assistance; Educational Services; Utilities; Agriculture, Forestry, Fishing & Hunting; Construction; Professional, Scientific & Technical Services; Other Services(d); and Information. The eight industries reporting contraction in August are: Transportation & Warehousing; Finance & Insurance; Accommodation & Food Services; Wholesale Trade; Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; and Public Administration.

WHAT RESPONDENTS ARE SAYING …

“Despite constant reminders of a tough economy … business prospects are fairly strong.” (Professional, Scientific & Technical Services)
“Fuel is easing, impacting many areas positively, but distributors are still under tremendous pressure due to the cost of diesel.” (Accommodation & Food Services)
“Although we’ve had some relief recently, energy prices continue to influence buying and budgeting decisions.” (Public Administration)
“New home construction continues to struggle under the weight of the current unsold housing inventory.” (Wholesale Trade)
“If the drop in oil prices can be sustained, we should see a more profitable third quarter.” (Utilities)

ISM NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM NON-MANUFACTURING AND ISM MANUFACTURING SURVEYS(a) AUGUST 2008

Index	Non-Manufacturing						Manufacturing
Index	Series Index August	Series Index July	Percent Point Change	Direction	Rate of Change	Trend(b) (Months)	Series Index August	Series Index July	Percent Point Change

NMI/PMI	50.6	49.5	+1.1	Growing	From Contracting	1	49.9	50.0	-0.1
Business Activity/ Production	51.6	49.6	+2.0	Growing	From Contracting	1	52.1	52.9	-0.8
New Orders	49.7	47.9	+1.8	Contracting	Slower	3	48.3	45.0	+3.3
Employment	45.4	47.1	-1.7	Contracting	Faster	4	49.7	51.9	-2.2
Supplier Deliveries	55.5	53.5	+2.0	Slowing	Faster	5	50.3	55.1	-4.8
Inventories	53.5	54.5	-1.0	Growing	Slower	4	49.3	45.0	+4.3
Prices	72.9	80.8	-7.9	Increasing	Slower	63	77.0	88.5	-11.5
Backlog of Orders	49.0	52.0	-3.0	Contracting	From Growing	1	43.5	43.0	+0.5
New Export Orders	44.5	47.5	-3.0	Contracting	Faster	2	57.0	54.0	+3.0
Imports	46.0	49.0	-3.0	Contracting	Faster	2	48.5	46.5	+2.0
Inventory Sentiment	66.0	62.5	+3.5	“Too High”	Faster	135	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	54.5	47.0	+7.5

(a) Non-Manufacturing ISM Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. Manufacturing ISM Report On Business^® data is seasonally adjusted for New Orders, Production, Employment, Supplier Deliveries and Inventories.

(b) Number of months moving in current direction

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

Commodities Up in Price

Airfares (6); Air Freight (2); Aluminum Products; Asparagus; Auto Fuel (3); Beef (6); Broccoli; Cable; Carbon Steel Pipe (3); Carpet; Cleaning Supplies; Copier Paper (7); Corrugated Products; #1 Diesel Fuel (4); #2 Diesel Fuel(c) (4); Exam Gloves; Food and Beverage (4); Food Products (4); Freight Charges (3); Freight Fuel Surcharges (3); Fuel(c) (19); Fuel Products (3); Fuel Surcharges (4); Gasoline(c) (12); #2 Heating Fuel (2); HVAC Equipment; IV Solutions; Latex Gloves (2); Medical and Surgical Supplies; Packaging; Paper (10); Paper Products (6); Petroleum Based Products (2); Piping Valves; Plastic Can Liners (3); Plastic Cups; Plastic Dinnerware; Plastic Pipe/Pipe Fittings; Poly Bags (3); Roofing Materials; Shipping Costs (6); Steel (6); Steel Pipe (3); Transportation Services (3); Travel Costs (2); Vehicle Rentals; and Wine.

Commodities Down in Price

Computer and Related Items; Copper Pipe; Copper Pipe Fittings; #2 Diesel Fuel(c); Fuel(c); Gasoline(c) (2); and Natural Gas.

Commodities in Short Supply

Latex Gloves is the only commodity reported in short supply.

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

AUGUST 2008 NON-MANUFACTURING INDEX SUMMARIES

NMI (Non-Manufacturing Index)

Beginning with the January 2008 Non-Manufacturing Report On Business^®, a composite index is now calculated as an indicator of the overall economic condition for the non-manufacturing sector. The NMI 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. In August, the NMI at 50.6 percent indicates growth in the non-manufacturing sector. 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.

The industries reporting growth in August are: Real Estate, Rental & Leasing; Mining; Health Care & Social Assistance; Educational Services; Utilities; Agriculture, Forestry, Fishing & Hunting; Construction; Professional, Scientific & Technical Services; Other Services(d); and Information. The industries reporting contraction in August are: Transportation & Warehousing; Finance & Insurance; Accommodation & Food Services; Wholesale Trade; Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; and Public Administration.

NMI HISTORY

Month	NMI	Month	NMI

Aug 2008	50.6	Apr 2008	52.0
Jul 2008	49.5	Mar 2008	49.6
Jun 2008	48.2	Feb 2008	49.3
May 2008	51.7	Jan 2008	44.6

Business Activity

ISM’s Non-Manufacturing Business Activity Index in August registered 51.6 percent, an increase of 2 percentage points when compared to the 49.6 percent registered in July. Seven industries reported increased business activity, and seven industries reported decreased activity for the month of August. Four industries reported no change from July. Comments from respondents include: “New customer orders”; “Major project initiatives”; and “Commodity sales are up.”

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

Business Activity	%Higher	%Same	%Lower	Index

Aug 2008	23	53	24	51.6
Jul 2008	24	51	25	49.6
Jun 2008	28	52	20	49.9
May 2008	32	50	18	53.6

THE LAST 12 MONTHS

Month	Business Activity Index	Month	Business Activity Index

Aug 2008	51.6	Feb 2008	50.8
Jul 2008	49.6	Jan 2008	41.9
Jun 2008	49.9	Dec 2007	54.4
May 2008	53.6	Nov 2007	54.6
Apr 2008	50.9	Oct 2007	55.5
Mar 2008	52.2	Sep 2007	55.7
Average for 12 months – 51.7 High – 55.7 Low – 41.9

New Orders

ISM’s Non-Manufacturing New Orders Index contracted in August for the third consecutive month. The index increased 1.8 percentage points to 49.7 percent from the 47.9 percent registered in July. Comments from respondents include: “Demand continues to ebb”; “Budget constraints”; and “Slower business activity and seasonal impacts.”

Industries reporting growth of new orders in August are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Educational Services; Information; Professional, Scientific & Technical Services; Utilities; Construction; and Public Administration. The industries reporting contraction of new orders in August are: Transportation & Warehousing; Wholesale Trade; Finance & Insurance; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; and Management of Companies & Support Services.

New Orders

%Higher

%Same

%Lower

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