3 Questions that Can Strengthen a Relationship

Source: Mateus Souza / Pexels

Have you ever noticed that the majority of hurt that happens in a relationship is unintentional? This is the person you love. You don’t mean to make them feel bad. Yet we all do things that hurt our partner.

To understand why, we need to understand the brain. We have an automatic network called the default mode network (DMN). Evolutionarily, it supported us living and working in clans. When it feels that your belonging to a clan, or your value to the clan, is threatened, it activates a stress response. You lash out. A fight ensues.

Because the DMN operates automatically, emotions swell up seemingly from nowhere. And the person doing the hurting doesn't understand what they did wrong.

What makes us feel that we are in danger? To gain insight into these primitive pain points, talk through the following questions with your partner. It will take your hurts from reactive to understandable:

1. When do I feel left out? The default mode network prioritizes fitting in and clan membership. Studies show that ostracism creates a stress response comparable to an injury or illness. It literally feels like life or death, because in our hunter-gatherer days, it was.

People in relationships can feel left out in myriad ways. I often see families in which one partner works long hours believing it is necessary to support the family financially, while the other feels that their spouse is choosing work over them. The home-based spouse feels that their partner prefers their work clan, while the working spouse feels unappreciated. Talking through such feelings, and acknowledging that both people are prioritizing the family through different roles, helps to assuage the hurt and bring everyone back into alliance.

Discuss when you feel most like a team. What activities make you feel like true partners? For example, date night often helps couples because it makes them feel like a single unit again. The DMN perceives that the clan is intact and functioning, making everyone feel more relaxed and loving.

2. Where do we compete? One couple I saw struggled with their bond because of unnecessary competition. When she made a home-cooked meal as an act of love, he'd say, “Oh you did? I could have done that.” It made her feel undermined and unseen. She was looking for an expression of love back—a hug or a kiss—but instead felt hurt.

Comparing happens automatically in our brains. The trick is to acknowledge this innate drive and flip the mindset: This person is your partner, not your competition. When they win, you win. When they make a meal, everyone benefits. Recognizing and labeling comparisons when they happen jolts us out of that mode. We can then choose to give each other the appreciation and support that we all need and deserve.

3. When do we people-please? Empathy is another instinctive process in the brain: We help each other when times are hard. This inclination long supported the success of the group and the species.

Sometimes this predilection gets the best of us. When we prioritize other people’s needs and care over our own, we suffer. Think of the Stage 1 cancer patient who spends long hours taking care of her friend with Stage 4 cancer, rationalizing that the friend is sicker so her needs should come first.

More commonly, consider the dynamics of a partnership in which one person complains regularly. That person could skew everything as wrong: “My coworkers take credit for my work, I’m tired because my sleep got disrupted, I never get time to do what I love…” Their partner will automatically go into empathy mode, trying to make the person’s life better, wearing themselves out in the process.

Identify the places where you go into empathy mode in your relationship, and consider whether it is appropriate or not. Remember that your partner is also an adult, responsible for their own happiness. It is not for you to solve. Doing so will open you up to taking better care of yourself, ultimately improving your relationship.

Relationships are hard and only made harder when we unknowingly bump up against automatic reactions that kept us safe when we lived in caves. Understanding their origins helps us resolve these hurts faster and engage more consciously so that they don’t happen again.

References

Bocage-Barthelemy, Y., Chatard, A., Jaafari, N., Tello, N., Billieux, J., Daveau, E., & Selimbegovic, L. (2018). Automatic social comparison: Cognitive load facilitates an increase in negative thought accessibility after thin ideal exposure among women. PLOS One, 1-13.

Corcoran, K., Crusius, J., & Mussweiler, T. (2011). Social comparison: Motives, standards, and mechanisms. In D. Chadee (Ed.), Theories in social psychology (pp. 119–139). Wiley Blackwell.

Gilbert, P., Price, J., & Allan, S. (1995). Social comparison, social attractiveness and evolution: How might they be related? New Ideas in Psychology, 13(2), 149-165.

Li, W., Mai, X., & Liu, C. (2014). The default mode network and social understanding of others: what do brain connectivity studies tell us. Frontiers in Human Neuroscience, 8(74), 1-5.

Raichle, M.E., MacLeod, A.M., Snyder, A.Z., Powers, W.J., Gusnard, D.A., & Shulman, G.L. (2001). A default mode of brain function. PNAS, 98(2), 676-682.

Soderberg, P., & Fry, D.P. (2016). Anthropological Aspects of Ostracism. In K.D. Williams & S.A. Nida (Eds.), Ostracism, Exclusion, and Rejection (pp. 258-272). Routledge.

NCERT Solutions for Class 12 Accountancy Chapter 3: Download in PDF

NCERT Solutions for Class 12 Accountancy Chapter 3: Stepwise and easy NCERT Solutions for Class 12 Accountancy Chapter 3, Reconstitution of a partnership firm- Retirement/Death of a partner are present here for free download in PDF.

Chapter 3 of NCERT Accountancy textbook talks about reconstitution a firm in case of retirement and death of a partner. The chapter includes discussion on Gaining ratio, Treatment of Goodwill, Journal entries to be made in either of the case present above and much more. Consistent practise of NCERT questions can help you score good marks in upcoming CBSE Board Exams 2024.

CBSE has deleted some topics from Accountancy NCERT textbook. To check revised CBSE Syllabus, click on the link below.

Revised CBSE Syllabus

Related:

CBSE Class 12 Accountancy Syllabus 2023-24 (PDF)

CBSE Class 12 Accountancy Sample Paper 2023-24 (PDF)

NCERT Solutions for Class 12 Accountancy Chapter 3 are presented below:

 Short Answer Questions:

 1.What are the different ways in which a partner can retire from the firm.

Ans.  Different ways in which a partner can retire from the firm are:

a.By consent of all partners- A partner can retire if all of his/her co-partners give in their consent about his/her retirement. A partner must take consent from his/her co-partners prior to his/her retirement.

b.By signing the express agreement- A partner can retire from the firm if it so mentioned in the partnership deed/agreement by expressing his/her intention of retirement, through a notice to co-partners.

c.By giving a written notice-When partnership among partners is through will, a partner can retire by writing a notice to co-partners and informing them about his/her intentions of retirements.

2.Write the various matters that need adjustments at the time of retirement of a partners.

Ans. Retirement of partner brings the need of adjustment in various matters listed below:

a.Treatment of goodwill;

b.Revaluation of assets and liabilities;

c.Adjustment in respect of unrecorded assets and liabilities;

d.Distribution of accumulated profits and losses;

e.Ascertainment of share of profit or loss up to the date of retirement/death;

f.Adjustment of capital, if required;

g.Settlement of the amounts due to retired/deceased partner

h.Ascertainment of new profit sharing ratio and gaining ratio

3.Distinguish between sacrificing ratio and gaining tab.

Ans. Gaining ratio can be defined as the ratio of share acquired by co-partners on retirement/death of a partner. On the other hand, sacrificing ratio is the ratio of profit sacrificed/surrendered by existing partner in case of admission of a new partner. In gaining ratio, partner’s share of profit is in surplus while in sacrificing ratio, the partner’s share of profit is in loss. Gaining ratio is calculated by subtracting old share from new share and sacrificing ratio can be calculated by subtracting new profit sharing ratio by old profit sharing ratio. Mathematically, it can be written down as:

 Gaining ratio = New share - old share

Sacrificing ratio= New profit sharing ratio - Old profit sharing ratio

Gaining ratio is calculated when the new profit sharing ratio of the continuing partners is specified and sacrificing ratio is calculated when there is a new admission in the partnership firm and amount of goodwill brought by new partner is transferred among the old partners.

4.Why do firm revaluate assets and reassures their liabilities on retirement or on the event of death of a partner .

Ans. After retirement or death of a partner it becomes essential to revaluate assets and liabilities to know about the actual worth of the company. The revaluation is done till the date of retirement/registered date of death of the partner, which means current date has to be taken. During this time period, some assets and liabilities might have gone unrecorded, there might have been an increase or decrease in the value of those assets and liabilities. Since all these changes are important for a firm to keep its book updated, it is essential to revaluate assets and liabilities whenever possible. Revaluation can have either positive or negative impact on a firm. Therefore, it is significant to keep a check on true worth of assets/liabilities of a firm.

5.Why a retiring/deceased partner is entitled to a share of goodwill of the firm.

Ans. Goodwill of a company is brought by experience, struggle, connections, efforts of every partner in the firm. Thus, a retiring/deceased partner is entitled to a share of goodwill of the firm to compensate for the merit and reputation brought in by the partner(s) together for the firm. After retirement/ death of a partner all the merits are shared by the existing/old partner’s and to respect the contribution made by the partner who left the partnership, a share from goodwill is entitled to him/her.

Long Answer Questions

 1.Explain the modes of payment to a retiring partner.

Ans. After the retirement of a partner, a sum has to be transferred or given to the retiring partner. The following mode of payments are used:

Retiring Partners’ Capital A/c                Dr.

To Cash/Bank A/c

Retiring Partners’ Capital A/c                   Dr.

To Retiring Partners’ Loan A/c

Retiring Partners’ Capital A/c                 Dr. (Total Amount due)

To Cash/Bank A/c                                           (Amount Paid)

To Retiring Partners’ Loan A/c                (Amount of Loan)

     a) For interest on loan

         Interest A/c                                                             Dr.

        To Retiring Partner’s Loan A/c

     b) For payment of instalment

         Retiring Partner’s Loan A/c                           Dr.

          To Cash/Bank A/

2.How will you compute the amount payable to a deceased partner?

Ans. The accounting treatment in this case is similar to that of retirement of a partner. The only difference that arises is that in case of death of a partner his claim is transferred to his executors. The amount payable to the deceased partner is prepared by dividing the amount that is to be credited and debited. In case of a partner, his claim shall also include his share of profit or loss, interest on capital, interest on drawings (if any) from the date of the last Balance Sheet to the date of his death of these.

Following credits are made into the deceased partner account.

(i)credit balance of his capital account;

(ii) credit balance of his current account (if any);

(iii) his share of goodwill;

(iv) his share of accumulated profits (reserves);

(v) his share in the gain of revaluation of assets

and liabilities;

(vi) his share of profits up to the date of death;

(vii) interest on his capital, if involved, up to the date of death; and

(viii) salary/commission, if any, due to him up to the date of death.

And following debits are made from deceased partner’s account, if deductions are necessary:

(i) debit balance of his current account (if any);

(ii) his share of goodwill to be written off, if necessary;

(iii) his share of accumulated losses;

(iv) his share of loss on revaluation of assets and liabilities;

(v) his share of loss up to the date of death;

(vi) his drawings up to the date of death;

(vii) interest on drawings, if involved, up to the date of death

Since, it is considered cumbersome to close the books and prepare final account, for the period between last update and date of death of the person, the deceased partner’s share of profit may be calculated on the basis of last year’s profit (or average of past few years) or on the basis of sales.

3.Explain the treatment of goodwill at the time of retirement or on the event of death of a partner?

Ans. A retiring partner or a deceased partner is entitled to goodwill under any of the mentioned situations, because goodwill is brought by efforts of the existing partners and should be compensated by the old partners to the retiring/deceased partner. Therefore, during the incident or occasion as per the case maybe, goodwill is  valued on the basis of agreement or mutual consent. In both of these situations, the accounting treatment depends on whether the goodwill appears in the books of firm or not.

a.When goodwill does not appear in the books:

When goodwill does not appear in the books of the firm, credit is given to the retiring partner for the share in goodwill by debiting the goodwill account to gaining partners capital accounts (individually) in their gaining ratio. Journal entry in this case is passed as:

Gaining Partners Capital A/c                         Dr. (Individually)

To Retiring/Deceased Partners Capital A/c

(Share in goodwill of retiring partner adjusted)

b.When goodwill appears in the books of firm

Step 1:The first step in this case is to write off the goodwill and then distribute the amount in mutually agreed profit sharing ratio. In this case, journal entry would be passed as:

All Partner’s Capital A/c                   Dr

To Goodwill A/c

(Goodwill written off among partners)

Step 2: Adjust goodwill using partner’s capital account with the share of goodwill of the deceased/retiring partner. The journal entry would be stated as:

Remaining Partner’s Capital A/c                  Dr

(partner’s capital account debited and retiring/deceased partners account credited)

4.Discuss the various methods of computing the share in profits in the event of death of a partner.

Ans. New profit sharing ratio can be defined as the ratio would be used in future for distribution of profits, post retirement or death of a partner. In this case, the existing partners share a profit ratio which exists already, i.e the profit gained by them on the basis of old sharing ratio and in addition, they get a surplus acquired by the retirement/death of a partner. The partner’s share of profit can be calculated on the basis of two methods: By last year’s profit or by sales.

a.On time basis- In this method of calculation, profit earned till the time of partner’s death is taken on the basis of average profit earned in last few years. It is assumed that profit would remain uniform throughout the year, hence he deceased partner is eligible for share of profit till his date of death. Mathematically, it can be calculated as

Share of deceased partner in profit =

(Previous year / Average profit)x (time period from date of balance till death/12 months/ 52 weeks/ 365 days) x profit share of deceased partner

b.On the basis of sales- In this method calculation is done on the basis of previous year’s sales and it is assumed that net profit margin would remain same as that of last year. Mathematically, it is calculated as:

Share of deceased partner in profit =

(Previous year’s profit/Previous year’s sales) x Sales from beginning of current year till date of death x share of deceased partner

To find NCERT Solutions for Class 12 Accountancy Chapter 3: Reconstitution of a partnership firm- Retirement or death of a partner, click on the link below.

Also Read:

CBSE Class 12 Syllabus 2023-24 (All Subjects)

CBSE Class 12 Sample Papers 2023-24 (All Subjects)

NCERT Books for Class 12 (All Subjects)

NCERT Solutions for Class 12 (All Subjects)

Services PMI® at 50.3%; May 2023 Services ISM® Report On Business®

Business Activity Index at 51.5%; New Orders Index at 52.9%; Employment Index at 49.2%; Supplier Deliveries Index at 47.7%

TEMPE, Ariz., June 5, 2023 /PRNewswire/ -- Economic activity in the services sector expanded in May for the fifth consecutive month as the Services PMI® registered 50.3 percent, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The sector has grown in 35 of the last 36 months, with the lone contraction in December of last year.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "In May, the Services PMI® registered 50.3 percent, 1.6 percentage points lower than April's reading of 51.9 percent. The composite index indicated growth in May for the fifth consecutive month after a reading of 49.2 percent in December, which was the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 51.5 percent, a 0.5-percentage point decrease compared to the reading of 52 percent in April. The New Orders Index expanded in May for the fifth consecutive month after contracting in December for the first time since May 2020; the figure of 52.9 percent is 3.2 percentage points lower than the April reading of 56.1 percent.

"The Supplier Deliveries registered 47.7 percent, 0.9 percentage point lower than the 48.6 percent recorded in April. In the last six months, the average reading of 48.0 percent (with a low of 45.8 percent in March) reflects the fastest supplier delivery performance since June 2009, when the index registered 46 percent. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

"The Prices Index was down 3.4 percentage points in May, to 56.2 percent. The Inventories Index expanded in May after a month of contraction and two previous months of growth, preceded by eight straight months of contraction; the reading of 58.3 percent is up 11.1 percentage points from April's figure of 47.2 percent. The Inventory Sentiment Index (61 percent, up 12.1 percentage points from April's reading of 48.9 percent) expanded after a month of contraction preceded by four months of growth, with a four-month period of contraction before that. The Backlog of Orders Index registered 40.9 percent, an 8.8-percentage point decrease compared to the April figure of 49.7 percent and the index's lowest reading since May 2009 (40 percent).

"Eleven industries reported growth in May. The Services PMI®, by being above 50 percent for a fifth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 160 months."

Nieves continues, "There has been a pullback in the rate of growth for the services sector. This is due mostly to the decrease in employment and continued improvements in delivery times (resulting in a decrease in the Supplier Deliveries Index) and capacity, which are in many ways a product of sluggish demand. The majority of respondents indicate that business conditions are currently stable; however, there are concerns relative to the slowing economy."

INDUSTRY PERFORMANCE

The 11 services industries reporting growth in May — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Professional, Scientific & Technical Services; Utilities; Retail Trade; Arts, Entertainment & Recreation; Construction; Other Services; Transportation & Warehousing; Public Administration; and Educational Services. The seven industries reporting a decrease in the month of May — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Wholesale Trade; Information; Health Care & Social Assistance; and Finance & Insurance.

WHAT RESPONDENTS ARE SAYING

ISM® SERVICES SURVEY RESULTS AT A GLANCE

COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS

MAY 2023

Index

 Services PMI®

Manufacturing PMI®

Series

Index

May

Series

Index

Apr

Percent

Point

Change

Direction

Rate of

Change

Trend*

(Months)

Series

Index

May

Series

Index

Apr

Percent

Point

Change

Services PMI®

50.3

51.9

-1.6

Growing

Slower

5

46.9

47.1

-0.2

Business Activity/

Production

51.5

52.0

-0.5

Growing

Slower

36

51.1

48.9

+2.2

New Orders

52.9

56.1

-3.2

Growing

Slower

5

42.6

45.7

-3.1

Employment

49.2

50.8

-1.6

Contracting

From Growing

1

51.4

50.2

+1.2

Supplier Deliveries

47.7

48.6

-0.9

Faster

Faster

4

43.5

44.6

-1.1

Inventories

58.3

47.2

+11.1

Growing

From Contracting

1

45.8

46.3

-0.5

Prices

56.2

59.6

-3.4

Increasing

Slower

72

44.2

53.2

-9.0

Backlog of Orders

40.9

49.7

-8.8

Contracting

Faster

3

37.5

43.1

-5.6

New Export Orders

59.0

60.9

-1.9

Growing

Slower

2

50.0

49.8

+0.2

Imports

50.0

51.3

-1.3

Unchanged

From Growing

1

47.3

49.9

-2.6

Inventory Sentiment

61.0

48.9

+12.1

Too High

From Too Low

1

N/A

N/A

N/A

Customers' Inventories

N/A

N/A

N/A

N/A

N/A

N/A

51.4

51.3

+0.1

OVERALL ECONOMY

Growing

Slower

5

Services Sector

Growing

Slower

5

Services ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.

*Number of months moving in current direction.

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

Commodities Up in Price

Automobiles; Beef; Construction Contractors; Construction Materials; Electrical Components (28); Fuel* (3); Gasoline* (4); Labor (30); Labor — Skilled (4); Transformers; and Wood Pallets.

Commodities Down in Price

Bacon; Fuel*; Gasoline*; International Freight; and Steel Products (2).

Commodities in Short Supply

Appliances (6); Construction Contractors; Construction Materials (2); Electrical Components (2); Labor (7); Labor — Construction (4); Labor — Skilled; Tourniquets (4); Transformers (9); and Vehicles (11).

Note: The number of consecutive months the commodity is listed is indicated after each item.

*Indicates both up and down in price.

MAY 2023 SERVICES INDEX SUMMARIES

Services PMI®

In May, the Services PMI® registered 50.3 percent, a 1.6-percentage point decrease compared to the April reading of 51.9 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI® above 49.9 percent, over time, generally indicates an expansion of the overall economy. Therefore, the May Services PMI® indicates the overall economy is growing for the fifth consecutive month after one month of contraction in December. Nieves says, "The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for May (50.3 percent) corresponds to a 0.2-percent increase in real gross domestic product (GDP) on an annualized basis."

SERVICES PMI® HISTORY

Month

Services PMI®

Month

Services PMI®

May 2023

50.3

Nov 2022

55.5

Apr 2023

51.9

Oct 2022

54.5

Mar 2023

51.2

Sep 2022

55.9

Feb 2023

55.1

Aug 2022

56.1

Jan 2023

55.2

Jul 2022

56.4

Dec 2022

49.2

Jun 2022

56.0

Average for 12 months – 53.9

High – 56.4

Low – 49.2

Business Activity

ISM®'s Business Activity Index registered 51.5 percent in May, a decrease of 0.5 percentage point from the reading of 52 percent in April, indicating growth for the 36th consecutive month. Comments from respondents include: "Business picking back up" and "Slightly higher and not all that noticeable, but all indicators show upward pressure."

The 13 industries reporting an increase in business activity for the month of May — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Retail Trade; Construction; Arts, Entertainment & Recreation; Utilities; Other Services; Transportation & Warehousing; Public Administration; Professional, Scientific & Technical Services; Educational Services; Finance & Insurance; and Health Care & Social Assistance. The four industries reporting a decrease in business activity for the month of May are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; and Information.

Business Activity

%Higher

%Same

%Lower

Index

May 2023

19.8

65.0

15.2

51.5

Apr 2023

24.8

64.4

10.8

52.0

Mar 2023

26.8

56.9

16.3

55.4

Feb 2023

23.7

60.6

15.7

56.3

New Orders

ISM®'s New Orders Index registered 52.9 percent, down 3.2 percentage points from the April reading of 56.1 percent. The index indicated expansion for the fifth consecutive month after contracting in December, ending a string of 30 consecutive months of growth. Comments from respondents include: "New contracts coming online" and "New orders up with demand."

The 11 industries reporting an increase in new orders for the month of May — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Other Services; Educational Services; Professional, Scientific & Technical Services; Utilities; Retail Trade; Construction; Transportation & Warehousing; Public Administration; and Finance & Insurance. The only industry reporting a decrease in new orders for the month of May is Wholesale Trade. Six industries reported no change in May.

New Orders

%Higher

%Same

%Lower

Index

May 2023

23.4

60.4

16.2

52.9

Apr 2023

29.7

59.9

10.4

56.1

Mar 2023

27.8

50.5

21.7

52.2

Feb 2023

33.7

56.1

10.2

62.6

Employment

Employment activity in the services sector contracted in May after three consecutive months of growth, with the index registering 49.2 percent, down 1.6 percentage points from the April figure of 50.8 percent. Comments from respondents include: "We are trying to do more with the same staff because margins in the industry have compressed" and "Our company is currently on a hiring freeze until there's a better understanding of where the economy is headed."

The nine industries reporting an increase in employment in May — listed in order — are: Accommodation & Food Services; Arts, Entertainment & Recreation; Construction; Transportation & Warehousing; Utilities; Professional, Scientific & Technical Services; Management of Companies & Support Services; Public Administration; and Other Services. The seven industries reporting a decrease in employment in May — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Educational Services; Real Estate, Rental & Leasing; Information; Finance & Insurance; Health Care & Social Assistance; and Wholesale Trade.

Employment

%Higher

%Same

%Lower

Index

May 2023

19.4

61.9

18.7

49.2

Apr 2023

20.4

63.2

16.4

50.8

Mar 2023

21.7

61.5

16.8

51.3

Feb 2023

21.7

60.2

18.1

54.0

Supplier Deliveries

The Supplier Deliveries Index registered 47.7 percent, down 0.9 percentage point from the 48.6 percent recorded in April. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. The May reading indicates supplier deliveries are faster and at a faster rate compared to the previous month. Comments from respondents include: "No delivery performance issues; supply on goods and services all good" and "Some suppliers are increasing capacity, while others have reduced their backlogs."

The four industries reporting slower deliveries in May are: Retail Trade; Professional, Scientific & Technical Services; Educational Services; and Accommodation & Food Services. The nine industries reporting faster supplier deliveries for the month of May — listed in order — are: Mining; Wholesale Trade; Construction; Arts, Entertainment & Recreation; Transportation & Warehousing; Utilities; Information; Public Administration; and Health Care & Social Assistance.

Supplier

Deliveries

%Slower

%Same

%Faster

Index

May 2023

4.3

86.8

8.9

47.7

Apr 2023

8.9

79.3

11.8

48.6

Mar 2023

3.6

84.4

12.0

45.8

Feb 2023

6.2

82.7

11.1

47.6

Inventories

The Inventories Index grew in May after contracting in April, following two consecutive months of growth preceded by eight months of contraction from June 2022 to January 2023. The index indicated four months of growth from February to May 2022 and eight months of contraction from June 2021 to January 2022. The reading of 58.3 percent in May was an 11.1-percentage point increase from the 47.2 percent reported in April and the index's highest since February 2021 (58.9 percent). Of the total respondents in May, 42 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Continuing to burn down excess pandemic stock" and "In the process of reducing inventory to a more 'normal' level after having raised it during supply chain disruptions."

The seven industries reporting an increase in inventories in May — listed in order — are: Real Estate, Rental & Leasing; Construction; Arts, Entertainment & Recreation; Public Administration; Finance & Insurance; Utilities; and Professional, Scientific & Technical Services. The seven industries reporting a decrease in inventories in May — listed in order — are: Other Services; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Retail Trade; Management of Companies & Support Services; Health Care & Social Assistance; and Wholesale Trade.

Inventories

%Higher

%Same

%Lower

Index

May 2023

30.4

55.7

13.9

58.3

Apr 2023

13.1

68.1

18.8

47.2

Mar 2023

21.2

63.2

15.6

52.8

Feb 2023

13.9

73.4

12.7

50.6

Prices

Prices paid by services organizations for materials and services increased in May for the 72nd consecutive month, with the index registering 56.2 percent, 3.4 percentage points lower than the 59.6 percent recorded in April. The Prices Index continues to indicate movement toward equilibrium, with an 11th consecutive reading near or below 70 percent (and three straight months below 60 percent), following 10 straight months of readings near or above 80 percent.

Twelve services industries reported an increase in prices paid during the month of May, in the following order: Public Administration; Information; Health Care & Social Assistance; Other Services; Educational Services; Arts, Entertainment & Recreation; Finance & Insurance; Wholesale Trade; Retail Trade; Construction; Utilities; and Professional, Scientific & Technical Services. The three industries reporting a decrease in prices for May are: Mining; Agriculture, Forestry, Fishing & Hunting; and Transportation & Warehousing.

Prices

%Higher

%Same

%Lower

Index

May 2023

24.9

69.2

5.9

56.2

Apr 2023

30.7

64.7

4.6

59.6

Mar 2023

30.2

63.6

6.2

59.5

Feb 2023

34.9

60.0

5.1

65.6

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders

The ISM® Services Backlog of Orders Index contracted in May for the third consecutive month after a previous stretch of 26 months of growth. The index reading of 40.9 percent is 8.8 percentage points lower than the 49.7 percent reported in April and the lowest since May 2009, when it registered 40 percent. Of the total respondents in May, 50 percent indicated they do not measure backlog of orders. Respondent comments include: "Cycle time and service-level improvements" and "Materials starting to arrive with greater frequency."

The five industries reporting an increase in order backlogs in May are: Mining; Public Administration; Professional, Scientific & Technical Services; Utilities; and Retail Trade. The nine industries reporting a decrease in order backlogs in May — listed in order — are: Real Estate, Rental & Leasing; Other Services; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Construction; Information; Finance & Insurance; and Health Care & Social Assistance.

Backlog of

Orders

%Higher

%Same

%Lower

Index

May 2023

9.5

62.8

27.7

40.9

Apr 2023

10.9

77.6

11.5

49.7

Mar 2023

9.5

77.9

12.6

48.5

Feb 2023

15.9

73.7

10.4

52.8

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew for the second consecutive month in May. The New Export Orders Index registered 59 percent, a 1.9-percentage point decrease from the 60.9 percent reported in April. New export orders contracted in March after two months of expansion. The index indicated contraction from October to December 2022, with eight months (February-September 2022) of growth before that. Of the total respondents in May, 67 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S.

The seven industries reporting an increase in new export orders in May — listed in order — are: Management of Companies & Support Services; Real Estate, Rental & Leasing; Accommodation & Food Services; Retail Trade; Information; Professional, Scientific & Technical Services; and Utilities. The five industries reporting a decrease in new export orders in May are: Mining; Construction; Wholesale Trade; Educational Services; and Transportation & Warehousing. Six industries reported no change in new export orders in May.

New Export

Orders

%Higher

%Same

%Lower

Index

May 2023

22.7

72.5

4.8

59.0

Apr 2023

25.3

71.1

3.6

60.9

Mar 2023

10.3

66.7

23.0

43.7

Feb 2023

27.9

67.5

4.6

61.7

Imports

The Imports Index registered 50 percent — indicating unchanged status — in May, down 1.3 percentage points from April's reading of 51.3 percent. The index indicated expansion in seven of the last nine months, with the only contraction in March. Sixty-seven percent of respondents reported that they do not use, or do not track the use of, imported materials.

The three industries reporting an increase in imports for the month of May are: Retail Trade; Construction; and Utilities. The five industries that reported a decrease in imports in May are: Other Services; Wholesale Trade; Educational Services; Transportation & Warehousing; and Health Care & Social Assistance. Ten industries reported no change in imports in May.

Imports

%Higher

%Same

%Lower

Index

May 2023

6.8

86.3

6.9

50.0

Apr 2023

6.5

89.5

4.0

51.3

Mar 2023

5.5

76.1

18.4

43.6

Feb 2023

7.3

90.6

2.1

52.6

Inventory Sentiment

The ISM® Services Inventory Sentiment Index grew substantially in May after a contraction in April, preceded by four consecutive months of growth and four months of contraction prior to that. The index registered 61 percent, a 12.1-percentage point increase from April's figure of 48.9 percent. This reading indicates that respondents feel their inventories are too high when correlated to business activity levels.

The 10 industries reporting sentiment that their inventories were too high in May — listed in order — are: Real Estate, Rental & Leasing; Wholesale Trade; Arts, Entertainment & Recreation; Utilities; Mining; Information; Retail Trade; Health Care & Social Assistance; Construction; and Management of Companies & Support Services. The four industries reporting a feeling that their inventories were too low in May are: Accommodation & Food Services; Transportation & Warehousing; Public Administration; and Professional, Scientific & Technical Services.

Inventory

Sentiment

%Too

High

%About

Right

%Too

Low

Index

May 2023

28.5

64.9

6.6

61.0

Apr 2023

17.4

63.0

19.6

48.9

Mar 2023

24.0

67.8

8.2

57.9

Feb 2023

22.3

66.0

11.7

55.3

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of May 2023.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Services ISM® Report On Business® (formerly the Non-Manufacturing ISM® Report On Business®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry's contribution to GDP. According to the BEA estimates for 2021 GDP (released December 22, 2022), the six largest services sectors are: Real Estate, Rental & Leasing; Government; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI® 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. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI® above 49.9 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49.9 percent, it is generally declining. The distance from 50 percent or 49.9 percent is indicative of the strength of the expansion or decline.

The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

ISM ROB Content

The Institute for Supply Management® ("ISM") Report On Business® (Manufacturing, Services and Hospital reports) ("ISM ROB") contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@ismworld.org; subject: Content Request.

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, Manufacturing PMI®, Services PMI®, and Hospital PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.

About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM® Report On Business®, its highly regarded certification programs and the ISM® Advance™ Digital Platform. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Services ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET.

The next Services ISM® Report On Business® featuring June 2023 data will be released at 10:00 a.m. ET on Thursday, July 6, 2023.

*Unless the New York Stock Exchange is closed.

Contact:

Kristina Cahill

Report On Business® Analyst

ISM®, ROB/Research Manager

Tempe, Arizona

+1 480.455.5910

Email: kcahill@ismworld.org

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SOURCE Institute for Supply Management