The following is the un-edited press release from the Institute for Supply Management.


(Tempe, Arizona) — Economic activity in the non-manufacturing sector contracted in July, 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 1.3 percentage points in July to 49.5 percent, indicating contraction for the second consecutive month in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 0.3 percentage point to 49.6 percent. The New Orders Index decreased 0.7 percentage point to 47.9 percent, and the Employment Index increased 3.3 percentage points to 47.1 percent. The Prices Index decreased 3.7 percentage points to 80.8 percent in July, indicating a slower rate in price increases than in June. According to the NMI, nine non-manufacturing industries reported growth in July. Members'' comments in July indicate concern about inflationary pressures and the effect on the economy. Respondents'' comments are mixed about business conditions and vary by industry and company.""""

INDUSTRY PERFORMANCE (Based on the NMI)

The nine industries reporting growth in July based on the new NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services*; Professional, Scientific & Technical Services; Educational Services; Utilities; Construction; Accommodation & Food Services; and Health Care & Social Assistance. The six industries reporting contraction in July are: Finance & Insurance; Public Administration; Wholesale Trade; Information; Transportation & Warehousing; and Retail Trade.

WHAT RESPONDENTS ARE SAYING ...

""""Our business remains at about the same level as the previous month, with continued focus on cost reduction."""" (Finance & Insurance)
""""The general state of the home-building industry has not changed since last month; however, with the commodity and code changes going into 2009, we face much higher construction costs and reduced margins across the entire supply chain."""" (Construction)
""""Continue to see slowdown in local economy."""" (Health Care & Social Assistance)
""""While still positive, the overall outlook for 2008 for our company is not as high as earlier in the year."""" (Wholesale Trade)
""""Governmental spending for services is up this period."""" (Professional, Scientific & Technical Services)


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

Commodities Up in Price

A/C Parts; Airfares (5); Air Freight; Auto Fuel (2); Bacon (2); Bath Tissue (2); Batteries; Beef (5); Bond Paper; Bread (3); Building Materials; Butter; Carbon Pipe (2); Cereal (2); Computer Peripherals; Computer Products and Supplies; Copier Paper (6); Copper (3); Crab Legs; Dairy (2); Deliveries (2); Diesel Fuel (10); # 1 Diesel Fuel (3); # 2 Diesel Fuel (3); Flour; Food and Beverage (3); Food Products (3); Freight Charges (2); Freight Fuel Surcharges (2); Fresh Food Items; Fuel (18); Fuel Products (2); Fuel Surcharges (3); Gasoline* (11); Gasoline Related (3); Gloves; Green Beans; # 2 Heating Fuel; Laptop Computers; Lubricants; MRO Supplies; Natural Gas (2); Office Equipment; Paper (9); Paper Products (5); Petroleum Based Products; Plastic Can Liners (2); Plastic Films (2); Plastic Products; Plumbing Supplies; Poly Bags (2); Red Peppers; Shipping Costs (5); Soy; Stainless Steel Products (3); Steel (5); Steel Pipe and Fittings (2); Steel Products (3); Transportation Costs (3); Transportation Services (2); Travel Costs; and Valves.

Commodities Down in Price

Cable (2); Cheese; and Gasoline.

Commodities in Short Supply

Carbon Pipe and Sulfuric Acid are the only commodities reported in short supply.

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. July''s NMI at 49.5 percent indicates contraction in the non-manufacturing sector for the second consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

The industries reporting growth in July are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services*; Professional, Scientific & Technical Services; Educational Services; Utilities; Construction; Accommodation & Food Services; and Health Care & Social Assistance. The industries reporting contraction in July are: Finance & Insurance; Public Administration; Wholesale Trade; Information; Transportation & Warehousing; and Retail Trade.

Business Activity