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Non-manufacturing business sector remains weak

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(Read caption) This chart shows the percent annual and monthly change in the non-manufacturing business sector over the past five years. After reaching a high point early in the year, the business activity index has dropped sharply in 2011.

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Yesterday, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that overall service related economic activity remained weak throughout August while the business activity component declined on the month.

At 55.6 the business activity index declined 0.89% since July while sliding 0.36% below the level seen a year earlier.
Like the ISM Manufacturing index released earlier this month, the non-manufacturing sector respondents are raising some concern over a sluggish economy, pricing pressure and hesitant customers:

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"Overall prices paid are increasing, while sales are still slightly behind projections." (Public Administration)

"This month we have seen a downward trend in sales activities due to weather and economic conditions." (Construction)

"Customer traffic is trending lower, but spending per person continues to increase. Labor cost savings realized through attrition, as fewer replacements are hired. The outlook for the remainder of 2011 is cautiously optimistic, with increased investment in marketing. 'Sticky prices' are keeping operating expenses elevated even as commodity supply eases." (Arts, Entertainment & Recreation)

"Business is holding, but looking weaker toward fourth quarter." (Professional, Scientific & Technical Services)

"Business climate uncertainty is increasing." (Management of Companies & Support Services)


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