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


(Tempe, Arizona) — Business activity in the non-manufacturing sector contracted in January for the first time in 58 months, 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 new NMI (Non-Manufacturing Index) at 44.6 percent indicates contraction within the non-manufacturing sector for January 2008. Non-manufacturing business activity contracted for the first time since March 2003,"""" Nieves said. He added, """"The New Orders Index contracted to 43.5 percent, the lowest since October 2001. The Employment Index contracted to 43.9 percent, the lowest since February 2002. The Prices Index decreased to 70.7 percent in January, indicating a slight slowing in price increases for January. According to the new NMI, only three non-manufacturing industries reported growth in January. Members'' comments in January indicate that weakness in the economy coupled with increased costs have negatively affected their business. Members have also indicated that they are experiencing inflationary pressures. The overall indication in January is that non-manufacturing has come to the end of a long-term period of growth and has contracted for the month of January.""""

TOP PERFORMING INDUSTRIES (Based on the NMI)

The three industries reporting growth in January based on the new NMI composite index — listed in order — are: Utilities; Professional, Scientific & Technical Services; and Educational Services. The 14 industries reporting contraction in January — are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Construction; Accommodation & Food Services; Transportation & Warehousing; Management of Companies & Support Services; Health Care & Social Assistance; Finance & Insurance; Information; Wholesale Trade; Retail Trade; Public Administration; Other Services; and Real Estate, Rental & Leasing.

WHAT RESPONDENTS ARE SAYING ...

""""Recession fears taking hold as cost containment strategies have been dusted off from 2002."""" (Finance & Insurance)
""""Business [is] slow as normal after holiday rush."""" (Management of Companies & Support Services)
""""Oil increases affecting delivery costs and the costs of goods."""" (Retail Trade)
""""Business is tough coming into Q1 after a very tough, unprofitable Q4. Competitive pricing is driving rates to unreasonable levels as competition is over fleeted."""" (Real Estate, Rental & Leasing)
""""... business activity is currently lower than normal at this time."""" (Wholesale Trade)

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

Commodities Up in Price

Copper Wire; Corn (2); Cotton Products; Diesel Fuel (4); #2 Diesel Fuel (4); Fuel (12); Fuel Surcharges; Gasoline (5); Oil; Paper (3); Plastic Bags (2); Poly Products; Rental Vehicles (2); Scientific Equipment/Supplies; Soy Products; Steel Products; and #10 Window Envelopes.
Commodities Down in Price

Cheese; Electronics; and Wallboard/Sheetrock.
Commodities in Short Supply

Titanium is the only commodity reported in short supply.

JANUARY 2008 NON-MANUFACTURING INDEX SUMMARIES

NMI (Non-Manufacturing Index)

Beginning with the January 2008 Non-Manufacturing Report On Business®, a composite index is 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. January''s NMI at 44.6 percent indicates a contraction 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 of business activity in January are: Utilities; Professional, Scientific & Technical Services; and Educational Services. The industries reporting decreased business activity in January are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Construction; Accommodation & Food Services; Transportation & Warehousing; Management of Companies & Support Services; Health Care & Social Assistance; Finance & Insurance; Information; Wholesale Trade; Retail Trade; Public Administration; Other Services*; and Real Estate, Rental & Leasing.

Business Activity

ISM''s Non-Manufacturing Business Activity Index in January registered 41.9 percent, indicating a significant contraction in business activity in January from the seasonally adjusted 54.4 percent registered in December. This is the first contraction in the non-manufacturing sector since March 2003, when the index registered 46.3 percent, and the lowest Business Activity Index since registering 40 percent in October 2001. Two industries reported increased business activity, and 14 industries reported decreased activity for the month of January. Two industries reported no change from December. Comments from respondents include: """"Pervasive economic weakness""""; """"Less customer demand, stiffer competition""""; and """"Fewer job orders, fewer inquiries about our capabilities.""""

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