Non-manufacturing sector on decline

The non-manufacturing sector saw its biggest one-month drop since they started keeping record in June 1998 in January and shrunk for the first time in almost five years, the Non-Manufacturing Institute for Supply Management (ISM) reported today. The non-manufacturing sector makes up 80% of the country’s Gross Domestic Product and includes a variety of industries that do not involve machinery. January’s ISM business activity index fell from 54.4% to 41.9%-- the first contraction since March of 2003. The New Orders Index fell to 43.5%, the lowest since October 2001 and the Employment Index dipped to 43.9%, the lowest since February 2002. The Prices Index, which reports whether organizations are paying more or less for products and services, decreased to 70.7% in January, indicating a slight slowing in price increases for the month. The only three industries that reported growth in January were utilities, professional, scientific & technical services and educational services. "Members' comments in January indicate that weakness in the economy coupled with increased costs have negatively affected their business," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee and senior vice president of supply management at the Hilton Hotels Corporation.