FOR RELEASE: July 2, 2007

Contact:	Rose Marie Goupil
	ISM, Media Relations
	Tempe, Arizona
	800/888-6276, Ext. 3015
	E-mail: rgoupil@ism.ws

PMI at 56%

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, 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 June 2007.

New Orders, Production and Employment Growing
Inventories Contracting
Deliveries Faster

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in June for the fifth consecutive month, while the overall economy grew for the 68th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "Following a weak first quarter, the manufacturing sector rebounded in a strong fashion during the second quarter. In June, manufacturing expanded at its fastest pace since April 2006 when the PMI Index registered 56.9. This performance appears sustainable in the third quarter due to the current strength in New Orders and Production."

TOP PERFORMING INDUSTRIES

The 12 industries reporting growth in June — listed in order — are: Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Computer & Electronic Products; Paper Products; Fabricated Metal Products; Primary Metals; Miscellaneous Manufacturing; Textile Mills; and Machinery.

WHAT RESPONDENTS ARE SAYING ...

• "Business remains brisk with isolated areas of softness." (Nonmetallic Mineral Products)
• "Things are picking up." (Primary Metals)
• "Busy now but still down approximately 13 percent from this time last year." (Fabricated Metal Products)
• "Exchange rate and some raw material increases have had a negative impact on our purchased components." (Transportation Equipment)
• "Petroleum-based material prices have begun to escalate at a faster pace." (Paper Products)

MANUFACTURING AT A GLANCE JUNE 2007
Index	Series Index June	Series Index May	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	56.0	55.0	+1.0	Growing	Faster	5
New Orders	60.3	59.6	+0.7	Growing	Faster	7
Production	62.9	58.3	+4.6	Growing	Faster	5
Employment	51.1	51.9	-0.8	Growing	Slower	3
Supplier Deliveries	49.7	50.3	-0.6	Faster	From Slowing	1
Inventories	45.3	46.1	-0.8	Contracting	Faster	11
Customers' Inventories	47.0	48.0	-1.0	Too Low	Faster	4
Prices	68.0	71.0	-3.0	Increasing	Slower	6
Backlog of Orders	53.5	52.5	+1.0	Growing	Faster	3
Exports	56.0	59.0	-3.0	Growing	Slower	55
Imports	54.5	57.5	-3.0	Growing	Slower	66
OVERALL ECONOMY				Growing	Faster	68
Manufacturing Sector				Growing	Faster	5

*Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum* (7); Chemicals (3); Copper Based Products (3); Gasoline (3); Natural Gas (5); Polypropylene Resins; Soybean Oil; Stainless Sheet Steel; Stainless Steel (6); and Steel (4).

Commodities Down in Price

Aluminum* is the only commodity reported down in price.

Commodities in Short Supply

No commodities are reported in short supply.

* Reported as both up and down in price.

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

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JUNE 2007 MANUFACTURING INDEX SUMMARIES

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PMI

Manufacturing growth accelerated in June as the PMI registered 56 percent, an increase of 1 percentage point when compared to May's reading of 55 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that both the overall economy and the manufacturing sector are growing. "The past relationship between the PMI and the overall economy indicates that the PMI average for January through June (53 percent) corresponds to a 3.4 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for June (56 percent) is annualized, it corresponds to a 4.4 percent increase in real GDP annually."

THE LAST 12 MONTHS

Month	PMI		Month	PMI
Jun 2007	56.0		Dec 2006	51.4
May 2007	55.0		Nov 2006	49.9
Apr 2007	54.7		Oct 2006	51.5
Mar 2007	50.9		Sep 2006	52.7
Feb 2007	52.3		Aug 2006	54.3
Jan 2007	49.3		Jul 2006	54.4
Average for 12 months – 52.7 High – 56.0 Low – 49.3

New Orders

ISM's New Orders Index rose to 60.3 percent in June. The index is 0.7 percentage point higher than the 59.6 percent reported in May. A New Orders Index above 49.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars). Eleven industries reported increases during June: Petroleum & Coal Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; and Machinery.

New Orders	% Better	% Same	% Worse	Net	Index
Jun 2007	37	48	15	+22	60.3
May 2007	33	54	13	+20	59.6
Apr 2007	40	45	15	+25	58.5
Mar 2007	30	51	19	+11	51.6

Production

ISM's Production Index registered 62.9 percent in June, which is 4.6 percentage points higher than the 58.3 percent reported in May. June is the fifth consecutive month of production growth for manufacturers. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in June, 12 registered growth: Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Primary Metals; Machinery; Transportation Equipment; Miscellaneous Manufacturing; and Furniture & Related Products.

Production	% Better	% Same	% Worse	Net	Index
Jun 2007	35	55	10	+25	62.9
May 2007	30	59	11	+19	58.3
Apr 2007	35	52	13	+22	57.3
Mar 2007	29	53	18	+11	53.0

Employment

ISM's Employment Index registered 51.1 percent in June, which is a decrease of 0.8 percentage point when compared to May's reading of 51.9 percent. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The five industries reporting growth in employment during June are: Petroleum & Coal Products; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Primary Metals.

Employment	% Higher	% Same	% Lower	Net	Index
Jun 2007	20	66	14	+6	51.1
May 2007	22	66	12	+10	51.9
Apr 2007	23	64	13	+10	53.1
Mar 2007	14	72	14	0	48.7

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was faster in June ending 47 consecutive months of slower deliveries. ISM's Supplier Deliveries Index registered 49.7 percent in June, a 0.6 percentage point decrease when compared to May's reading of 50.3 percent. A reading above 50 percent indicates slower deliveries. The five industries reporting slower supplier deliveries in June are: Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Chemical Products; and Primary Metals.

Supplier Deliveries	% Slower	% Same	% Faster	Net	Index
Jun 2007	7	87	6	+1	49.7
May 2007	5	93	2	+3	50.3
Apr 2007	7	87	6	+1	50.2
Mar 2007	5	93	2	+3	51.3

Inventories

Manufacturers' inventories registered 45.3 percent in June, a 0.8 percentage point decrease when compared to May's reading of 46.1 percent. This is the 11th consecutive month of inventory liquidation. An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars). The four industries reporting higher inventories in June are: Plastics & Rubber Products; Textile Mills; Transportation Equipment; and Furniture & Related Products.

Inventories	% Higher	% Same	% Lower	Net	Index
Jun 2007	13	64	23	-10	45.3
May 2007	15	62	23	-8	46.1
Apr 2007	16	62	22	-6	46.3
Mar 2007	17	64	19	-2	47.5

Customers' Inventories*

The ISM Customers' Inventories Index registered 47 percent in June, which is 1 percentage point lower than the 48 percent reported in May. The index indicates that respondents believe their customers have less than sufficient inventories on hand (inventories are too low) at this time. This is the fourth consecutive month in which manufacturers have reported their customers' inventories to be too low. Four industries reported higher customers' inventories during June: Furniture & Related Products; Textile Mills; Plastics & Rubber Products; and Fabricated Metal Products.

Customers' Inventories	% Reporting	%Too High	%About Right	%Too Low	Net	Index
Jun 2007	67	12	70	18	-6	47.0
May 2007	76	9	78	13	-4	48.0
Apr 2007	77	13	68	19	-6	47.0
Mar 2007	75	11	74	15	-4	48.0

Prices*

In June, the ISM Prices Index registered 68 percent, indicating manufacturers are paying higher prices on average when compared to May. While 42 percent of respondents reported paying higher prices and 6 percent reported paying lower prices, 52 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In June, 14 industries reported paying higher prices: Plastics & Rubber Products; Miscellaneous Manufacturing; Paper Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Primary Metals; Transportation Equipment; Textile Mills; Wood Products; Fabricated Metal Products; Machinery; Chemical Products; Furniture & Related Products; and Computer & Electronic Products.

Prices	% Higher	% Same	% Lower	Net	Index
Jun 2007	42	52	6	+36	68.0
May 2007	45	52	3	+42	71.0
Apr 2007	50	46	4	+46	73.0
Mar 2007	36	59	5	+31	65.5

Backlog of Orders*

ISM's Backlog of Orders Index registered 53.5 percent in June, 1 percentage point higher than the 52.5 percent reported in May. Of the 86 percent of respondents who reported their backlog of orders, 23 percent reported greater backlogs, 16 percent reported smaller backlogs, and 61 percent reported no change from May. The eight industries reporting an increase in order backlogs in June are: Food, Beverage & Tobacco Products; Paper Products; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; Primary Metals; Machinery; and Miscellaneous Manufacturing.

Backlog of Orders	% Reporting	% Greater	% Same	% Less	Net	Index
Jun 2007	86	23	61	16	+7	53.5
May 2007	87	22	61	17	+5	52.5
Apr 2007	85	26	57	17	+9	54.5
Mar 2007	89	20	54	26	-6	47.0

New Export Orders*

ISM's New Export Orders Index registered 56 percent in June, a decrease of 3 percentage points when compared to May's index of 59 percent. This is the 55th consecutive month of growth in export orders. The seven industries reporting growth in new export orders in June are: Furniture & Related Products; Machinery; Miscellaneous Manufacturing; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

New Export Orders	% Reporting	% Higher	% Same	% Lower	Net	Index
Jun 2007	78	18	76	6	+12	56.0
May 2007	78	24	70	6	+18	59.0
Apr 2007	82	20	74	6	+14	57.0
Mar 2007	77	18	75	7	+11	55.5

Imports*

Imports of materials by manufacturers grew during June as the Imports Index registered 54.5 percent, a decrease of 3 percentage points when compared to May. This is the 66th consecutive month of growth in import orders. The 10 industries reporting growth in import activity for June are: Nonmetallic Mineral Products; Wood Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; and Chemical Products.

Imports	% Reporting	% Higher	% Same	% Lower	Net	Index
Jun 2007	85	17	75	8	+9	54.5
May 2007	82	20	75	5	+15	57.5
Apr 2007	84	23	70	7	+16	58.0
Mar 2007	82	24	67	9	+15	57.5

* The Backlog of Orders, Prices, Customers' Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment leadtime for Capital Expenditures decreased 4 days to 115 days. Average leadtime for Production Materials decreased 1 day to 45 days. Average leadtime for Maintenance, Repair and Operating (MRO) Supplies increased 1 day to 23 days.

Percent Reporting
Capital Expenditures	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Jun 2007	26	8	12	18	23	13	115
May 2007	20	9	12	20	28	11	119
Apr 2007	21	9	12	24	22	12	115
Mar 2007	19	10	17	22	22	10	110
Production Materials	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Jun 2007	19	43	26	7	5	0	45
May 2007	20	41	24	12	2	1	46
Apr 2007	18	45	25	8	3	1	46
Mar 2007	21	35	29	12	3	0	45
MRO Supplies	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Jun 2007	50	36	9	5	0	0	23
May 2007	51	37	9	3	0	0	22
Apr 2007	52	33	11	3	0	1	25
Mar 2007	52	34	10	4	0	0	22

About this Report

The data presented herein is obtained from a survey of manufacturing supply managers 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. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Manufacturing ISM Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indexes for five of the indicators with varying weights: New Orders — 30%; Production — 25%; Employment — 20%; Supplier Deliveries — 15%; and Inventories — 10%.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 41.9 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 41.9 percent, it is generally declining. The distance from 50 percent or 41.9 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

Responses to Buying Policy reflect the percent reporting the current month's leadtime, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management™. The Institute for Supply Management™, established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. 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 Manufacturing ISM Report On Business® is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).

The next Manufacturing ISM Report On Business® featuring the July 2007 data will be released at 10:00 a.m. (ET) on Wednesday, August 1, 2007.

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