The following is an unedited transcript of the news release from the Institute for Supply Management.


(Tempe, Arizona) — Economic activity in the non-manufacturing sector contracted in February, 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 41.6 percent in February, 1.3 percentage points lower than the 42.9 percent registered in January, indicating contraction in the non-manufacturing sector for the fifth consecutive month at a slightly faster rate. The Non-Manufacturing Business Activity Index decreased 4 percentage points to 40.2 percent. The New Orders Index decreased 0.9 percentage point to 40.7 percent, and the Employment Index increased 2.9 percentage points to 37.3 percent. The Prices Index increased 5.6 percentage points to 48.1 percent in February, indicating a slower decrease in prices from January. According to the NMI, one non-manufacturing industry reported growth in February. Respondents are concerned about the soft market conditions, the negative outlook for employment and the overall state of the economy.""""

INDUSTRY PERFORMANCE (Based on the NMI)

The one industry reporting growth in February based on the NMI composite index is Arts, Entertainment & Recreation. The 14 industries reporting contraction in February — listed in order — are: Wholesale Trade; Management of Companies & Support Services; Mining; Information; Retail Trade; Other Services; Accommodation & Food Services; Public Administration; Educational Services; Construction; Professional, Scientific & Technical Services; Utilities; Transportation & Warehousing; and Finance & Insurance.

WHAT RESPONDENTS ARE SAYING ...

""""General market conditions are still retracting, with financing being the largest barrier for new orders."""" (Construction)
""""Sales volumes are steady. Margins are up as input costs decline. Suppliers are having a difficult time with credit. Concerned that not all of them will survive."""" (Agriculture, Forestry, Fishing & Hunting)
""""Continued low occupancy. Group booking cancellations."""" (Accommodation & Food Services)
""""We continue to lend; however, the credit of a lot of these consumers is so poor that half of our deals never make it through our credit committee."""" (Finance & Insurance)
""""Declining value of endowment will continue to push back construction plans, halt program development, and lead to staff and faculty reductions."""" (Educational Services)
""""Extreme care given to capital outlay due to budget restrictions given the economy."""" (Public Administration)

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

Acetonitrile; Diesel Fuel; #1 Diesel Fuel (2); #2 Diesel Fuel (2); Gasoline* (18); and Pharmacy Products.
Commodities Down in Price

Aluminum; Aluminum Products; Beef (6); Cheese (2); Copper Products (4); Corrugated Boxes (2); Corrugated Products; Electric Transformers; Electrical Products; Gasoline* (8); Polyethylene Films; Pork; Steel Products; and Transportation Costs.
Commodities in Short Supply

Acetonitrile (2) is the only commodity reported in short supply.

NMI (Non-Manufacturing Index)

In February, the NMI registered 41.6 percent indicating contraction in the non-manufacturing sector at a slightly faster rate compared to January''s reading of 42.9 percent. 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.

Business Activity

ISM''s Non-Manufacturing Business Activity Index in February registered 40.2 percent, a decrease of 4 percentage points when compared to the 44.2 percent registered in January. Three industries reported increased business activity, and 14 industries reported decreased activity for the month of February. One industry reported no change from January. Comments from respondents include: """"General business activity continues to slow""""; and """"Capital spending has been severely cut back.""""

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

New Orders

ISM''s Non-Manufacturing New Orders Index contracted in February for the fifth consecutive month. The index registered 40.7 percent, which is a decrease of 0.9 percentage point from the 41.6 percent registered in January. Comments from respondents include: """"Lower sales than anticipated""""; """"Reduced funding""""; and """"Overall lack of demand.""""

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