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 June, 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) decreased 3.5 percentage points in June to 48.2 percent, indicating contraction after two consecutive months of growth within the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 3.7 percentage points to 49.9 percent. The New Orders Index decreased 5 percentage points to 48.6 percent, and the Employment Index decreased 4.9 percentage points to 43.8 percent. The Prices Index increased 7.5 percentage points to 84.5 percent in June, indicating a faster rate in price increases than in May. The Prices Index is at its highest level since this report began. According to the NMI, eight non-manufacturing industries reported growth in June. Members'' comments in June indicate that rising fuel, energy and commodity costs are negatively impacting their respective businesses. Respondents'' comments are mixed on business conditions and the overall economy.""""

INDUSTRY PERFORMANCE (Based on the NMI)

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

WHAT RESPONDENTS ARE SAYING ...

""""Oil prices are affecting most every supplier we have."""" (Transportation & Warehousing)
""""Energy costs are beyond the pain point. They are disruptive to every part of our business."""" (Agriculture, Forestry, Fishing & Hunting)
""""Challenging due to continuing cost pressure from suppliers. Planning on decreased production activity as summer wears on and budgets tighten."""" (Other Services*)
""""High cost of commodities, fuel prices, are impacting margins and economic conditions are negatively impacting traffic counts and average check amounts."""" (Accommodation & Food Services)
""""Energy cost is starting to have an effect on cost of products from all sectors."""" (Wholesale Trade)

COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
Commodities Up in Price

Aircraft Fuel (2); Airfares (4); Aluminum Based Products (2); Appliances; Appliance Parts; Asphalt; Asphalt Construction; Asphalt Products; Auto Fuel; Bacon; Baked Goods; Bananas; Bath Tissue; Beef (4); Biomedical Waste Disposal Containers; Bread (2); Bubble Wrap; Car Rentals (3); Carbon Pipe — Seamless; Carpet; Caustic Soda; Cereal; Cheese (2); Chicken; Copier Paper (5); Copper (2); Corrugated Packaging (2); Dairy; Deliveries; Diesel Fuel (9); #1 Diesel Fuel (2); #2 Diesel Fuel (2); Food and Beverage (2); Food Products (2); Freight Charges; Freight Fuel Surcharges; Freight Services; Fuel (17); Fuel Products; Fuel Surcharges (2); Fuel Transportation; Gasoline (10); Gasoline Related (2); Hotels; Medical Supplies (2); Natural Gas; Office and Computer Supplies; Oil Based Products (2); Paper (8); Paper Products (4); Pipe Fittings (2); Plastics (2); Plastic Base Resins; Plastic Can Liners; Plastic Films; Poly Bags; Polyethylene Resins; Roof Felt; Shipping Costs (4); Shipping Surcharges; Soft Drinks; Stainless Steel Products (2); Steel (4); Steel Conduit; Steel Driven Items; Steel Pipe and Fittings; Steel Plate; Steel Products (2); Transportation Costs (2); Transportation Services; and #10 Window Envelopes.

Commodities Down in Price

Cable; Copper Pipe; Electrical Products; and Wire Cable.

Commodities in Short Supply

No commodities are reported short in 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. June''s NMI at 48.2 percent indicates contraction in the non-manufacturing sector after two consecutive months of growth. 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 June are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Mining; Educational Services; Construction; Utilities; Information; and Wholesale Trade. The industries reporting contraction in June are: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Other Services*; Health Care & Social Assistance; Finance & Insurance; Public Administration; Management of Companies & Support Services; and Retail Trade.

Business Activity

ISM''s Non-Manufacturing Business Activity Index in June registered 49.9 percent, a decrease of 3.7 percentage points when compared to the 53.6 percent registered in May. Ten industries reported increased business activity, and four industries reported decreased activity for the month of June. Four industries reported no change from May. Comments from respondents include: """"Fewer job orders, expressions of interest from prospects/clients""""; """"Reduced capacity due to fuel prices""""; and """"Slower booking rate.""""