Economic activity in the non-manufacturing sector contracted in December, 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) registered 40.6 percent in December, 3.3 percentage points higher than the 37.3 percent registered in November, indicating contraction in the non-manufacturing sector for the third consecutive month, but at a slightly slower rate. The Non-Manufacturing Business Activity Index increased 6.6 percentage points to 39.6 percent. The New Orders Index increased 4.5 percentage points to 39.9 percent, and the Employment Index increased 3.4 percentage points to 34.7 percent. The Prices Index decreased 0.6 percentage point to 36 percent in December, indicating a decrease in prices from November. This is the lowest level for the index since it was first reported in 1997. According to the NMI, one non-manufacturing industry reported growth in December. Respondents’ comments reflect concern about the overall decline in business, lack of funding, budget cuts and lower employment.”

INDUSTRY PERFORMANCE (Based on the NMI)

The one industry reporting growth in December based on the new NMI composite index is Retail Trade. The 17 industries reporting contraction in December — listed in order — are: Wholesale Trade; Professional, Scientific & Technical Services; Mining; Utilities; Transportation & Warehousing; Educational Services; Agriculture, Forestry, Fishing & Hunting; Other Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Public Administration; Finance & Insurance; Accommodation & Food Services; Construction; Real Estate, Rental & Leasing; Health Care & Social Assistance; and Information.

WHAT RESPONDENTS ARE SAYING …

* “Difficulties with consumer and equity loans resulting from economic slowing.” (Finance & Insurance)
* “Business is holding steady in the economic downturn.” (Information)
* “Sales are okay. Credit from suppliers is becoming an issue even with a perfect payment history. Everyone is scared. Prices for most materials declining rapidly.” (Agriculture, Forestry, Fishing & Hunting)
* “State budgets being reduced, corporate clients cancelling training, and clients not acting swiftly on proposals have brought down the backlog and lowered expectations.” (Professional, Scientific & Technical Services)
* “Efforts continue to ramp up to control/reduce spending.” (Management of Companies & Support Services)
* “There has been an overall decline in business. There have been some price decreases as well. Overall capital spend is significantly lower.” (Accommodation & Food Services)