ECONOMIC GROWTH CONTINUES IN 2012

FOR RELEASE: December 6, 2011

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


Manufacturing Growth Expected In 2012
Revenue to Increase 5.5%
Capital Expenditures to Increase 1.9%
Capacity Utilization Currently at 79.2%
Non-Manufacturing to Grow Moderately in 2012
Revenue to Increase 3.1%
Capital Expenditures to Increase 0.1%
Capacity Utilization Currently at 85.2%

(Tempe, Arizona) — Economic growth in the United States will continue in 2012, say the nation's purchasing and supply management executives in their December 2011 Semiannual Economic Forecast. Expectations are for a continuation of the economic recovery that began in mid-2009, as indicated in the monthly ISM Report On Business®. The forecast projects optimism about the U.S. economy for 2012. The manufacturing sector, overall, is positive about prospects in 2012 with revenues expected to increase in 17 industries, while the non-manufacturing sector appears slightly less positive about the year ahead, with 15 industries expecting higher revenues. Capital expenditures, a major driver in the U.S. economy, however, will increase only modestly in the manufacturing sector, while investment in the non-manufacturing sector will remain essentially flat.

These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management™ (ISM). The forecast was released today by Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee; and by Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.

Manufacturing Summary

Expectations for 2012 are positive as 69 percent of survey respondents expect revenues to be greater in 2012 than in 2011. The panel of purchasing and supply executives expects a 5.5 percent net increase in overall revenues for 2012, compared to a 7 percent increase reported for 2011 over 2010 revenues. The following 17 manufacturing industries expecting revenue improvement over 2011 — listed in order — are: Computer & Electronic Products; Machinery; Petroleum & Coal Products; Wood Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Furniture & Related Products; Transportation Equipment; Paper Products; Printing & Related Support Activities; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing.

"Manufacturing purchasing and supply executives expect to see continued growth in 2012. They are optimistic about their overall business prospects for the first half of 2012, and are even more optimistic about the second half of 2012," said Holcomb. "Manufacturing has demonstrated its resilience throughout this challenging economic recovery period with consistent growth dating back to August of 2009 (as indicated in the monthly ISM Report On Business®), and our forecast calls for a continuation of that growth in 2012. Respondents expect raw materials pricing pressures in 2012 to be less than they were in 2011, and expect their margins will improve. Manufacturing is now in its 28th consecutive month of growth as measured by and reported in the monthly Manufacturing ISM Report On Business®."

In the manufacturing sector, respondents report operating at 79.2 percent of their normal capacity, down from 83.2 percent reported in April 2011. Purchasing and supply executives predict that capital expenditures will increase by 1.9 percent in 2012 over 2011, compared to an 11 percent increase reported for 2011 over 2010. Survey respondents also forecast that they will reduce inventories by 1.2 percent in an effort to improve their purchased inventory-to-sales ratio in 2012. Manufacturers have an expectation that employment in the sector will increase by 1.3 percent, while labor and benefit costs are expected to increase an average of 2.4 percent in 2012. Manufacturing purchasers are predicting growth in exports and imports in 2012. Respondents also expect the U.S. dollar to weaken very slightly on average against the currencies of major trading partners.

The panel also predicts the prices they pay for raw materials will increase 2 percent during the first four months of 2012, and will increase an additional 0.9 percent during the balance of the year, with an overall increase of 2.9 percent for 2012. This compares to a reported 5.7 percent increase in raw materials prices for 2011 compared with 2010.

Survey respondents report that the most challenging problems facing their businesses as they plan for 2012 are: poor sales (43.9 percent); government regulations (22 percent); inflation (17.4 percent); cost of labor (4.5 percent); quality of labor (4.5 percent); taxes (4.5 percent); and interest rates and finance (3 percent).

The panel also indicated that supply chain management practices will be improved in 2012 using the following strategies, listed in order: supplier performance management; strategic sourcing/supply base rationalization; demand planning/supplier lead time reduction; inventory management and control; and process and information systems improvements.

Non-Manufacturing Summary

Fifty-eight percent of non-manufacturing supply management executives expect their 2012 revenues to be greater than in 2011. They currently expect a 3.1 percent net increase in overall revenues for 2012 compared to a 1.5 percent increase reported for 2011 over 2010 revenues. The 15 non-manufacturing industries expecting revenue improvement in 2012 over 2011 — listed in order — are: Professional, Scientific & Technical Services; Mining; Construction; Other Services; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Information; Retail Trade; Transportation & Warehousing; Arts, Entertainment & Recreation; Accommodation & Food Services; Real Estate, Rental & Leasing; Finance & Insurance; Utilities; and Public Administration.

"Non-manufacturing supply managers report operating at 85.2 percent of their normal capacity, more than the 83.7 percent reported in April 2011. They are optimistic about continued growth in the first half of 2012 compared to the second half of 2011, and they have a higher level of optimism about the next 12 months than they had last December for 2011," said Nieves. "They forecast that their capacity to produce products and provide services will rise by 3.2 percent during 2012, and capital expenditures will increase by 0.1 percent from the 2011 level. Non-manufacturers also predict their employment will increase by 1.1 percent during 2012."

Respondents in non-manufacturing industries expect the prices they pay for materials and services will increase by 2.7 percent during 2012. They also forecast their overall labor and benefit costs will increase 1.8 percent in 2012. Profit margins are reported to have decreased in the second and third quarters of 2011, and respondents expect them to increase between now and April 2012.

Survey respondents report that the most challenging problems facing their businesses as they plan for 2012 are: poor sales (34.4 percent); government regulations (26.4 percent); inflation (10.4 percent); interest rates and finance (9.6 percent); cost of labor (8.8 percent); taxes (5.6 percent); and quality of labor (4.8 percent).

Survey respondents indicate that process improvement is the most frequently cited means of improving supply chains in 2012. Other improvement approaches include: Leverage of new and existing technology; contract management; professional development; and strategic sourcing.



OPERATING RATE

Manufacturing

Manufacturing purchasing and supply executives report their companies are currently operating at 79.2 percent of normal capacity. This is a modest decrease when compared to April 2011 (83.2 percent) and December 2010 (80.2 percent). The November data from the Manufacturing ISM Report On Business® indicates the manufacturing sector is in its 28th consecutive month of growth. The following nine industries — listed in order — are operating above the average rate of 79.2 percent: Wood Products; Paper Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities; and Apparel, Leather & Allied Products.

Non-Manufacturing

Non-manufacturing supply executives report their organizations are currently operating at 85.2 percent of normal capacity. This is higher than the 83.7 percent reported in April 2011, and higher than the 82.9 percent reported in December 2010. Considering production capacity increases reported in the following section of this forecast, this indicates that non-manufacturing industries are continuing to add capacity, but also find it necessary to maintain their utilization of capacity at a relatively high level. The following eight industries — listed in order — are operating at or above the average capacity level of 85.2 percent: Information; Educational Services; Other Services; Transportation & Warehousing; Utilities; Real Estate, Rental & Leasing; Public Administration; and Health Care & Social Assistance.

Operating Rate
  Manufacturing Non-Manufacturing
  Dec
2010
April
2011
Dec
2011
Dec
2010
April
2011
Dec
2011
90%+ 36% 47% 36% 45% 49% 52%
50%-89% 60% 50% 60% 52% 49% 47%
Below 50% 4% 3% 4% 3% 2% 1%
Est. Overall Average 80.2% 83.2% 79.2% 82.9% 83.7% 85.2%


PRODUCTION CAPACITY

Manufacturing

Production capacity in manufacturing increased 4.6 percent in 2011 as 44 percent of purchasing and supply executives reported an average capacity increase of 13.2 percent, 9 percent reported decreases averaging 13 percent, and 47 percent reported no change. This compares to a predicted increase of 8.1 percent for 2011 made in April 2011. Expectations for 2012 are for an increase of 5.6 percent. The following 13 industries report achieving an increase in production capacity in 2011: Fabricated Metal Products; Transportation Equipment; Machinery; Wood Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Paper Products; and Chemical Products.

Manufacturing Production Capacity
  For 2011 For 2011 For 2012
  Predicted
April 2011
Magnitude
of Change
Reported
Dec 2011
Magnitude
of Change
Predicted
Dec 2011
Magnitude
of Change
Higher 45% +18.6% 44% +13.2% 47% +12.5%
Same 52% NA 47% NA 48% NA
Lower 3% -10.3% 9% -13% 5% -6.2%
Net Average   +8.1%   +4.6%   +5.6%

The principal means of achieving increases in production capacity in 2011 were (in order of importance):

  1. Additional plant and/or equipment
  2. More hours worked with existing personnel
  3. Additional personnel (permanent, temporary or contract)
  4. Fewer shutdowns of operations or facilities.
Non-Manufacturing

The capacity to produce products or provide services in the non-manufacturing sector increased 1.1 percent during 2011. This compares to the 0.5 percent increase reported in December 2010 for the year 2010, and is less than the prediction in April 2011 of a 2 percent increase for 2011. For 2012, an increase of 3.2 percent is predicted. For 2011, 23 percent of non-manufacturing supply managers indicate increases averaging 12.4 percent, and 9 percent of respondents indicate decreases averaging 16.8 percent. Sixty-eight percent see no change in their capacity. The 11 industries reporting increases in capacity in 2011 — listed in order — are: Information; Professional, Scientific & Technical Services; Mining; Wholesale Trade; Transportation & Warehousing; Utilities; Accommodation & Food Services; Management of Companies & Support Services; Other Services; Retail Trade; and Public Administration.

Non-Manufacturing Production or Provision Capacity
  For 2011 For 2011 For 2012
  Predicted
April 2011
Magnitude
of Change
Reported
Dec 2011
Magnitude
of Change
Predicted
Dec 2011
Magnitude
of Change
Higher 24% +10.2% 23% +12.4% 39% +9.0%
Same 72% NA 68% NA 58% NA
Lower 4% -11.0% 9% -16.8% 3% -8.5%
Net Average   +2.0%   +1.1%   +3.2%

The principal means of achieving increases in production capacity in 2011 were (in order of importance):

  1. More hours worked with existing personnel
  2. Additional personnel (permanent, temporary or contract)
  3. Additional plant and/or equipment
  4. Replaced equipment with technically advanced equipment.


CAPITAL EXPENDITURES — 2011 vs. 2010

Manufacturing

Purchasing and supply managers report 2011 capital expenditures increased 11 percent on average when compared to 2010 levels. The actual expenditures for 2011 were significantly below survey respondents' previous expectations, as they predicted an increase of 17.9 percent for 2011 in April 2011. The 47 percent of purchasers who reported increased capital expenditures in 2011 indicated an average increase of 31.7 percent, while the 16 percent who said their capital spending was reduced reported an average decrease of 23.9 percent. Thirty-seven percent of respondents said they spent the same in 2011 as in 2010. The 12 industries showing increases in capital expenditures for 2011 — in order of percentage increase — are: Petroleum & Coal Products; Machinery; Fabricated Metal Products; Transportation Equipment; Printing & Related Support Activities; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Nonmetallic Mineral Products; and Computer & Electronic Products.

Non-Manufacturing

Non-manufacturing supply management executives report their level of capital expenditures in 2011 compared to 2010 increased 4 percent. This compares to the 0.1 percent decrease reported for 2010 one year ago, and is less than the 1.4 percent increase predicted by respondents in April 2011. Thirty-six percent of respondents report increases averaging 22.4 percent. An additional 23 percent report decreases averaging 17.9 percent. Forty-one percent indicate they spent the same on capital expenditures in 2011 as in 2010. The 11 industries experiencing increases in capital expenditures in 2011 — listed in order — are: Mining; Transportation & Warehousing; Information; Educational Services; Other Services; Real Estate, Rental & Leasing; Wholesale Trade; Public Administration; Retail Trade; Finance & Insurance; and Accommodation & Food Services.

Capital Expenditures 2011 vs. 2010
  Manufacturing Non-Manufacturing
  Predicted
April 2011
Reported
Dec 2011
Magnitude
of Change
Predicted
April 2011
Reported
Dec 2011
Magnitude
of Change
Higher 39% 47% +31.7% 28% 36% +22.4%
Same 50% 37% NA 47% 41% NA
Lower 11% 16% -23.9% 25% 23% -17.9%
Net Average +17.9%   +11.0% +1.4%   +4.0%


PREDICTED CAPITAL EXPENDITURES — 2012 vs. 2011

Manufacturing

Purchasing and supply executives expect capital expenditures to increase 1.9 percent in 2012. The 42 percent of respondents who predict increased capital expenditures in 2012 indicate an average increase of 19.9 percent, while the 16 percent who said their capital spending would be reduced predict an average decrease of 37.6 percent. Forty-two percent said they expect to spend the same in 2012 as in 2011. The 13 industries predicting increases in capital expenditures for 2012 — in order of percentage increase — are: Petroleum & Coal Products; Fabricated Metal Products; Furniture & Related Products; Nonmetallic Mineral Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Primary Metals; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Chemical Products; and Computer & Electronic Products.

Non-Manufacturing

Non-manufacturing purchasing and supply executives are expecting an increase of 0.1 percent in capital expenditures in 2012, significantly less than the increase of 4 percent they are reporting for 2011. The 37 percent of respondents expecting to spend more on capital expenditures predict an average increase of 14.3 percent. An additional 24 percent anticipate a decrease averaging 22.2 percent. Thirty-nine percent expect to spend the same on capital expenditures in 2012 as in 2011. The seven industries expecting increases in capital expenditures in 2012 — in order of percentage increase — are: Accommodation & Food Services; Mining; Utilities; Professional, Scientific & Technical Services; Construction; Wholesale Trade; and Retail Trade.

Predicted Capital Expenditures 2012 vs. 2011
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Magnitude
of Change
Predicted
Dec 2011
Magnitude
of Change
Higher 42% +19.9% 37% +14.3%
Same 42% NA 39% NA
Lower 16% -37.6% 24% -22.2%
Net Average   +1.9%   +0.1%


PRICES — Changes Between End of 2010 and End of 2011

Manufacturing

After an initial forecast in April 2011 of a 7.4 percent increase in prices paid for 2011, survey respondents now report realized price increases averaging 5.7 percent for the year. The 76 percent who say their prices are higher now than at the end of 2010 report an average increase of 8.5 percent, while the 14 percent who report lower prices averaged a 4.6 percent decrease. The remaining 10 percent indicate no change between the end of 2010 and the end of 2011. The 16 industries experiencing price increases — listed in order — are: Petroleum & Coal Products; Machinery; Food, Beverage & Tobacco Products; Primary Metals; Apparel, Leather & Allied Products; Chemical Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Printing & Related Support Activities; Transportation Equipment; Paper Products; Fabricated Metal Products; Miscellaneous Manufacturing; Wood Products; Nonmetallic Mineral Products; and Computer & Electronic Products.

Manufacturing Price Changes Between End of 2010 and End of 2011
  Predicted
Dec 2010
Magnitude
of Change
Predicted
April 2011
Magnitude
of Change
Reported
Dec 2011
Magnitude
of Change
Higher 75% +6.1% 83% +9.1% 76% +8.5%
Same 14% NA 12% NA 10% NA
Lower 11% -5.4% 5% -4.1% 14% -4.6%
Net Average   +4.0%   +7.4%   +5.7%
Non-Manufacturing

As 2011 draws to a close, non-manufacturing supply managers report prices they pay have increased by 2.8 percent over the entire year. This is less than the 4.7 percent increase they predicted in April 2011, and significantly more than the 2.2 percent decrease reported one year ago for 2010. Sixty-five percent of purchasers report price increases averaging 5.4 percent. Twelve percent of purchasers indicate decreased prices with an average reduction of 6.3 percent, and 23 percent of respondents have not experienced overall price changes this year. The 17 industries reporting price increases in 2011 — listed in order — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Utilities; Professional, Scientific & Technical Services; Mining; Health Care & Social Assistance; Public Administration; Other Services; Finance & Insurance; Educational Services; Retail Trade; Transportation & Warehousing; Management of Companies & Support Services; and Information.

Non-Manufacturing Price Changes Between End of 2010 and End of 2011
  Predicted
Dec 2010
Magnitude
of Change
Predicted
April 2011
Magnitude
of Change
Reported
Dec 2011
Magnitude
of Change
Higher 71%   81% +6.4% 65% +5.4%
Same 21% NA 12% NA 23% NA
Lower 8%   7% -7.4% 12% -6.3%
Net Average       +4.7%   +2.8%


PRICES — Predicted Changes Between End of 2011 and April 2012

Manufacturing

Sixty-three percent of purchasing and supply managers expect the prices they pay to increase in early 2012 by an average of 4.4 percent. At the same time, 11 percent anticipate decreases averaging 6.6 percent. Including the 26 percent who expect no change in prices in the first four months of 2012, purchasers expect the net average overall price change to increase 2 percent for the first four months of 2012. The eight industries predicting increases in prices paid in the first part of 2012 higher than the 2 percent average — listed in order — are: Plastics & Rubber Products; Petroleum & Coal Products; Furniture & Related Products; Chemical Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Transportation Equipment.

Non-Manufacturing

Non-manufacturing survey respondents predict their purchases in the first four months of 2012 will cost an average of 2.1 percent more than at the end of 2011. This is less than the 2.8 percent increase reported in the preceding section for all of 2011. Considering the prediction of a price change for all of 2012 (2.7 percent), purchasing and supply executives expect most of next year's price increases to occur in the first part of next year. Sixty-three percent of non-manufacturing respondents predict the prices they pay will increase an average of 4.1 percent in the first part of 2012. Seven percent of respondents expect price decreases averaging 6.3 percent. The remaining 30 percent predict no change in prices in the first four months of 2012. The nine industries predicting greater than or equal to the 2.1 percent average increase in prices they expect to pay in the first part of 2012 — in order of percentage increase — are: Construction; Real Estate, Rental & Leasing; Wholesale Trade; Other Services; Public Administration; Health Care & Social Assistance; Management of Companies & Support Services; Arts, Entertainment & Recreation; and Accommodation & Food Services.

Prices — Predicted Changes Between End of 2011 and April 2012
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Magnitude
of Change
Predicted
Dec 2011
Magnitude
of Change
Higher 63% +4.4% 63% +4.1
Same 26% NA 30% NA
Lower 11% -6.6% 7% -6.3%
Net Average   +2.0%   +2.1%


PRICES — Predicted Changes Between End of 2011 and End of 2012

Manufacturing

Respondents predict a net average increase in prices paid of 2.9 percent between December 2011 and December 2012, indicating they expect prices to increase an additional 0.9 percent during the period of May 2012 through December 2012. Seventy-two percent of respondents expect an average price increase of 5.3 percent for the full year of 2012, while 14 percent expect an average decline of 5.9 percent. The remaining 14 percent expect no change in their average prices paid for the year. The eight industries expecting to receive above-average increases by the end of 2012 — listed in order — are: Plastics & Rubber Products; Petroleum & Coal Products; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; and Fabricated Metal Products.

Non-Manufacturing

For all of 2012, non-manufacturing supply management executives expect their prices to increase an average of 2.7 percent. Seventy-two percent of respondents expect increases averaging 4.6 percent, 6 percent anticipate prices to drop an average of 11.3 percent, and 22 percent foresee no change in prices during the next year. The eight industries expecting greater than the 2.7 percent average price increase by the end of 2012 — in order of percentage increase — are: Construction; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Accommodation & Food Services; Arts, Entertainment & Recreation; Mining; Utilities; and Management of Companies & Support Services.

Predicted Price Changes Between End of 2011 and End of 2012
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Magnitude
of Change
Predicted
Dec 2011
Magnitude
of Change
Higher 72% +5.3% 72% +4.6%
Same 14% NA 22% NA
Lower 14% -5.9% 6% -11.3%
Net Average   +2.9%   +2.7%


LABOR AND BENEFIT COSTS — Predicted Rate Change End of 2011 vs. End of 2012

Manufacturing

Purchasing and supply executives expect higher overall labor and benefit costs for 2012. Sixty-eight percent of respondents expect increased labor and benefit costs and expect them to grow by an average of 3.9 percent for all of 2012, while the 3 percent forecasting lower costs see them decreasing by an average of 6.9 percent. Including the 29 percent of respondents who believe costs will remain the same, the expected overall net rate of increase is 2.4 percent between the end of 2011 and the end of 2012. The nine industries expecting to pay an increase of 2.4 percent or higher — in order of percentage increase — are: Wood Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Paper Products; and Printing & Related Support Activities.

Non-Manufacturing

Purchasing and supply executives expect a 1.8 percent increase in labor and benefit costs for non-manufacturing industries in 2012. Fifty-five percent of respondents expect such costs to increase by an average of 4.1 percent. Another 6 percent of respondents expect labor and benefit costs to shrink by an average of 6.8 percent, and 39 percent believe costs will remain stable during 2012. The 18 industries expecting increases in labor and benefit costs in 2012 over 2011 — in order of percentage increase — are: Utilities; Professional, Scientific & Technical Services; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Mining; Arts, Entertainment & Recreation; Information; Accommodation & Food Services; Retail Trade; Wholesale Trade; Construction; Educational Services; Transportation & Warehousing; Other Services; Management of Companies & Support Services; Finance & Insurance; Health Care & Social Assistance; and Public Administration.

Labor and Benefit Costs — Predicted Rate Change End of 2012 vs. End of 2011
  Manufacturing Non-Manufacturing
  Predicted for
2011
Dec 2010
Predicted for
2012
Dec 2011
Magnitude
of Change
Predicted for
2011
Dec 2010
Predicted for
2012
Dec 2011
Magnitude
of Change
Higher 66% 68% +3.9% 56% 55% +4.1%
Same 30% 29% NA 34% 39% NA
Lower 4% 3% -6.9% 10% 6% -6.8%
Net Average +1.9%   +2.4% +1.1%   +1.8%


EMPLOYMENT

Change in Overall Employment

Manufacturing

ISM's Manufacturing Business Survey Committee members report that manufacturing employment increased 2.4 percent since April 2011, and forecast that employment will increase, on average, 1.3 percent for the full year of 2012. Thirty-eight percent of respondents expect employment to be 7 percent higher in 2012, while 15 percent predict employment to be lower by 9.3 percent. The remaining 47 percent of respondents expect their employment levels to be unchanged in 2012. The 11 industries predicting increases in employment in 2012 — listed in order — are: Nonmetallic Mineral Products; Petroleum & Coal Products; Wood Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Machinery.

Non-Manufacturing

ISM's Non-Manufacturing Business Survey Committee members report that non-manufacturing employment has not changed since April 2011. Looking ahead to 2012, they forecast that employment will increase 1.1 percent by the end of 2012. For 2012, 29 percent of respondents expect higher levels of employment, 14 percent anticipate lower levels, and 57 percent expect their employment levels to be unchanged. The 11 industries anticipating increases in their employment in 2012 — listed in order — are: Professional, Scientific & Technical Services; Mining; Construction; Information; Transportation & Warehousing; Retail Trade; Wholesale Trade; Public Administration; Real Estate, Rental & Leasing; Utilities; and Other Services.

Change in Overall Employment
  Manufacturing Non-Manufacturing
  Reported for 2011
(since April)
Dec 2011
Predicted
for 2012
Dec 2011
Magnitude
of Change
Reported for 2011
(since April)
Dec 2011
Predicted
for 2012
Dec 2011
Magnitude
of Change
Higher 43% 38% +7.0% 27% 29% +6.6%
Same 34% 47% NA 48% 57% NA
Lower 23% 15% -9.3% 25% 14% -6.5%
Net Average +2.4%   +1.3% 0.0%   +1.1%
Diffusion Index 60% 61.5%   51% 57.5%  

Note: A diffusion index above 50 percent would generally indicate an expectation of higher employment; below 50 percent, an expectation of lower employment.



EXPORT BUSINESS — Predicted Change for Next Half Year (First Half of 2012)

Manufacturing

The responses for this semiannual report indicate purchasers see increases in new export orders for the first half of 2012. This is consistent with the most recent ISM New Export Orders Index data in the monthly Manufacturing ISM Report On Business®, which has shown export orders at 50 percent or above for the last 29 months. Of the 81 percent of respondents who export, 49 percent predict an increase (44 percent moderate and 5 percent substantial) over the next half year. Nine percent of respondents (9 percent moderate and 0 percent substantial) predict a decrease in their exports, and 42 percent anticipate no change in exports over the next half year. The 12 industries expecting growth in exports during the first half of 2012 — listed in order — are: Paper Products; Apparel, Leather & Allied Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Primary Metals; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; and Food, Beverage & Tobacco Products.

Non-Manufacturing

For the first half of 2012, non-manufacturing supply managers who report that their organizations engage in exporting feel more optimistic than they did one year ago concerning their export business. Of the 29 percent of non-manufacturing business survey respondents who report that they export, 44 percent predict an increase (41 percent moderate and 3 percent substantial) over the next half year. Five percent of the respondents expect a decrease in their exports (5 percent moderate and 0 percent substantial), and 51 percent anticipate no change in exports over the next half year. Of the industries that report they export, the following seven industries expect growth in export business in the first half of 2012: Mining; Wholesale Trade; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Other Services; Transportation & Warehousing; and Professional, Scientific & Technical Services.

Predicted Change in Export Business — Next Half Year
  Manufacturing Non-Manufacturing
  For 2011 For 2012 For 2011 For 2012
  First Half
of 2011
Predicted
Dec 2010
First Half
of 2012
Predicted
Dec 2011
First Half
of 2011
Predicted
Dec 2010
First Half
of 2012
Predicted
Dec 2011
Substantial Increase 7% 5% 12% 3%
Moderate Increase 53% 44% 20% 41%
No Change 37% 42% 64% 51%
Moderate Decrease 3% 9% 0% 5%
Substantial Decrease 0% 0% 4% 0%
Diffusion Index 78% 69.9% 64% 68.9%


IMPORT BUSINESS — Predicted Change for Next Half Year (First Half of 2012)

Manufacturing

Purchasers expect increases in imports in the first half of 2012. Of the 87 percent of purchasers who reported they import, 39 percent predict an increase in their imports over the next half year (34 percent moderate and 5 percent substantial), while 13 percent predict a decrease in imports of materials (12 percent moderate and 1 percent substantial). Less than half of survey respondents (48 percent) expect no change in imports. The 11 industries expecting growth in imports — listed in order — are: Petroleum & Coal Products; Primary Metals; Computer & Electronic Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Transportation Equipment; Nonmetallic Mineral Products; Paper Products; Machinery; Electrical Equipment, Appliances & Components; and Chemical Products.

Non-Manufacturing

Non-manufacturers have higher expectations for the use of imports for the first half of 2012 than they did in December 2010 for the first half of 2011. Of the 50 percent of non-manufacturing organizations who reported they import, 38 percent (35 percent moderate and 3 percent substantial) predict an increase in their imports during the first half of 2012. Eight percent of the respondents (8 percent moderate and 0 percent substantial) predict a decrease in imports of materials and services. The remaining 54 percent of purchasers expect no change in imports over the next half year. The 10 industries expecting growth in imports — listed in order — are: Transportation & Warehousing; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Construction; Retail Trade; Arts, Entertainment & Recreation; Mining; Other Services; Wholesale Trade; and Professional, Scientific & Technical Services.

Predicted Change in Import Business — Next Half Year
  Manufacturing Non-Manufacturing
  For 2011 For 2012 For 2011 For 2012
  First Half
of 2011
Predicted
Dec 2010
First Half
of 2012
Predicted
Dec 2011
First Half
of 2011
Predicted
Dec 2010
First Half
of 2012
Predicted
Dec 2011
Substantial Increase 6% 5% 7% 3%
Moderate Increase 42% 34% 27% 35%
No Change 42% 48% 59% 54%
Moderate Decrease 9% 12% 7% 8%
Substantial Decrease 1% 1% 0% 0%
Diffusion Index 68.8% 62.9% 63.6% 65.1%


BUSINESS REVENUES

Business Revenues Comparison — 2011 vs. 2010

Manufacturing

Summarizing revenues for 2011, 67 percent of respondents say revenue was better than 2010, and that nominal (before adjusting for inflation) revenues increased an average of 13.3 percent over 2010. Conversely, 17 percent say their nominal revenues decreased in 2011 by an average of 11.5 percent, and the remaining 16 percent indicate no change. Overall, purchasing and supply executives indicate a net nominal increase of 7 percent in business revenues for 2011 over 2010. This is slightly less than the 7.5 percent increase that was forecast in April 2011 for all of 2011, but greater than the 5.6 percent increase predicted in December 2010 for all of 2011. The 15 industries reporting increases (highest to lowest) in revenues in 2011 are: Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Wood Products; Transportation Equipment; Paper Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Primary Metals; Chemical Products; and Printing & Related Support Activities.

Manufacturing Business Revenues — 2011 vs. 2010
  Predicted
Dec 2010
Nominal
% Change
Predicted
April 2011
Nominal
% Change
Reported
Dec 2011
Nominal
% Change
Higher 65% +13.1% 68% +13.2% 67% +13.3%
Same 24% NA 20% NA 16% NA
Lower 11% -26.9% 12% -13.2% 17% -11.5%
Net Average   +5.6%   +7.5%   +7.0%

Non-Manufacturing

Non-manufacturing supply management executives report that business revenues for 2011 have increased over 2010 by 1.5 percent. This is less than the 2.1 percent increase predicted in April 2011 for all of 2011. The 52 percent of respondents reporting better business in 2011 than in 2010 estimate an average nominal (before adjusting for inflation) revenue increase of 7.9 percent. This is in contrast to an average nominal decrease of 10.6 percent reported by the 25 percent of respondents who indicate worse business in 2011. The remaining 23 percent have experienced no change in 2011 from 2010. The 13 industries reporting increases in revenues in 2011 — listed in order — are: Professional, Scientific & Technical Services; Mining; Transportation & Warehousing; Real Estate, Rental & Leasing; Wholesale Trade; Retail Trade; Arts, Entertainment & Recreation; Other Services; Agriculture, Forestry, Fishing & Hunting; Information; Accommodation & Food Services; Utilities; and Public Administration.

Non-Manufacturing Business Revenues — 2011 vs. 2010
  Predicted
Dec 2010
Nominal
% Change
Predicted
April 2011
Nominal
% Change
Reported
Dec 2011
Nominal
% Change
Higher 51% +8.8% 50% +9.3% 52% +7.9%
Same 37% NA 32% NA 23% NA
Lower 12% -9.0% 18% -14.1% 25% -10.6%
Net Average   +3.4%   +2.1%   +1.5%

Business Revenues Prediction for 2012

Manufacturing

Manufacturing survey respondents forecast that business revenues for 2012 will be stronger than in 2011. The 69 percent of respondents forecasting better business revenues in 2012 than in 2011 estimate an average nominal (before adjusting for inflation) increase of 9.3 percent in their organizations' revenues. This is in contrast to an average nominal decrease of 11.4 percent forecast by the 8 percent who predict worse business revenues in 2012. Including the 23 percent who see no change in 2012, the forecast for overall net nominal increase in business revenues for 2012 over 2011 is 5.5 percent. The following 17 manufacturing industries expecting revenue improvement over 2011 — listed in order — are: Computer & Electronic Products; Machinery; Petroleum & Coal Products; Wood Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Furniture & Related Products; Transportation Equipment; Paper Products; Printing & Related Support Activities; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing.

Non-Manufacturing

Non-manufacturing survey respondents forecast that business revenues for 2012 will be improved over 2011 by an average of 3.1 percent. This is less than the 1.5 percent increase reported for 2011, and also more than the 0.2 percent increase reported one year ago for 2010 revenues over 2009 revenues. The 58 percent of respondents forecasting better business in 2012 than in 2011 estimate an average nominal (before adjusting for inflation) revenue increase of 7.1 percent. This is in contrast to an average nominal decrease of 12.7 percent forecast by the 8 percent who predict worse business in 2012. The remaining 34 percent see no change in 2012. The 15 industries expecting increases in revenues in 2012 — in order of percentage increase — are: Professional, Scientific & Technical Services; Mining; Construction; Other Services; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Information; Retail Trade; Transportation & Warehousing; Arts, Entertainment & Recreation; Accommodation & Food Services; Real Estate, Rental & Leasing; Finance & Insurance; Utilities; and Public Administration.

Business Revenues — 2012 vs. 2011
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Nominal
% Change
Predicted
Dec 2011
Nominal
% Change
Higher 69% +9.3% 58% +7.1%
Same 23% NA 34% NA
Lower 8% -11.4% 8% -12.7%
Net Average   +5.5%   +3.1%


PROFIT MARGINS

Manufacturing

Survey respondents report that profit margins decreased on average during the second and third quarters of 2011, as 31 percent experienced an increase in profit margins, 37 percent had lower margins, and 32 percent reported no change. However, expectations are for a significant improvement between now and April of 2012 as 40 percent of respondents forecast better profit margins, 19 percent predict lower profit margins, and 41 percent predict no change.

Non-Manufacturing

Non-manufacturing supply management executives were asked about changes in profit margins their organizations recently experienced and are expecting in the near future. Their responses indicate that 27 percent experienced an increase in profit margins during the second and third quarters of 2011, while 36 percent found smaller profit margins, and 37 percent had no change in margins during the same period. Looking ahead from now through April 2012, 32 percent of supply managers expect improved profit margins, 18 percent expect lower profit margins, and the remaining 50 percent of respondents anticipate no change in their profit margins.

Profit Margins
  Manufacturing Non-Manufacturing
  Apr 2011 through
Nov 2011
Reported Dec 2011
Nov 2011 through
Apr 2012
Predicted Dec 2011
Apr 2011 through
Nov 2011
Reported Dec 2011
Nov 2011 through
Apr 2012
Predicted Dec 2011
Better 31% 40% 27% 32%
Same 32% 41% 37% 50%
Worse 37% 19% 36% 18%
Diffusion Index 47% 60.5% 45.5% 57%


BUSINESS COMPARISON

The First Half of 2012 with Last Half of 2011

Manufacturing

Looking ahead to the first half of 2012, survey respondents are optimistic about the next half year as reflected in a diffusion index of 62.5 percent. Comparing their outlook for the first half of 2012 to the last half of 2011, 41 percent predict it will be better, 16 percent predict it will be worse, and 43 percent expect no change. The 11 industries expecting improvement in the first half of 2012 — listed in order — are: Petroleum & Coal Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Furniture & Related Products; Primary Metals; Printing & Related Support Activities; Transportation Equipment; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing.

Non-Manufacturing

The first half of 2012 is predicted to be stronger than the last half of 2011, according to non-manufacturing purchasing and supply managers. The diffusion index indicating current expectations is 60 percent. Thirty-five percent of respondents expect the first half of next year to be better than the last half of this year, 15 percent anticipate it will be worse, and 50 percent predict no change. The 12 industries expecting improvement in the first half of 2012 — listed in order — are: Real Estate, Rental & Leasing; Accommodation & Food Services; Retail Trade; Health Care & Social Assistance; Wholesale Trade; Public Administration; Professional, Scientific & Technical Services; Transportation & Warehousing; Mining; Other Services; Finance & Insurance; and Construction.

Business — First Half 2012 vs. Last Half 2011
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Predicted
Dec 2011
Better 41% 35%
Same 43% 50%
Worse 16% 15%
Diffusion Index 62.5% 60%

Note: A diffusion index above 50 percent would generally indicate an expectation of the first half of the coming year being better than the second half of the current year.

The Second Half of 2012 with the First Half of 2012

Manufacturing

Purchasing and supply executives are even more optimistic about the second half of 2012 compared to the first half of next year. The percentage of survey respondents who forecast the second half of 2012 to be better than the first half is 39 percent, while 8 percent expect it to be worse, and 53 percent expect no change. The diffusion index for the second half of 2012 is 65.5 percent, compared to 62.5 percent for the first half of 2012. The 15 industries predicting improvement in the second half of 2012 — listed in order — are: Primary Metals; Furniture & Related Products; Nonmetallic Mineral Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Petroleum & Coal Products; Chemical Products; Machinery; Computer & Electronic Products; Printing & Related Support Activities; Fabricated Metal Products; and Transportation Equipment.

Non-Manufacturing

Comparing the second half of 2012 to the first half, non-manufacturing purchasing and supply executives feel more optimistic than they do for the first half of the year compared to the last half of 2011 (diffusion index of 63.5 percent for the second half compared to 60 percent for the first half). The percentage of respondents who currently forecast the second half of 2012 to be better than the first half is 37 percent, while 10 percent expect it to be worse. An additional 53 percent of purchasers expect no change. The 15 industries expecting improvement in the second half of the year — listed in order — are: Information; Arts, Entertainment & Recreation; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Construction; Wholesale Trade; Retail Trade; Utilities; Finance & Insurance; Mining; Professional, Scientific & Technical Services; Other Services; Accommodation & Food Services; and Health Care & Social Assistance.

Business — Second Half 2012 vs. First Half 2012
  Manufacturing Non-Manufacturing
  Predicted
Dec 2011
Predicted
Dec 2011
Better 39% 37%
Same 53% 53%
Worse 8% 10%
Diffusion Index 65.5% 63.5%

Note: A diffusion index above 50 percent would generally indicate an expectation of the second half of the coming year being better than the first half.



SPECIAL QUESTION: MOST IMPORTANT PROBLEMS FACING BUSINESS IN 2012

Manufacturing

In response to a special question regarding the single most important problem that their businesses face in planning for 2012, manufacturing respondents indicated the following:

  • Poor sales (43.9%)
  • Government regulations (22%)
  • Inflation (17.4%)
  • Cost of labor (4.5%)
  • Quality of labor (4.5%)
  • Taxes (4.5%)
  • Interest rates and finance (3%).
Non-Manufacturing

In response to a special question regarding the single most important problem that their businesses face in planning for 2012, non-manufacturing respondents indicated the following:

  • Poor sales (34.4%)
  • Government regulations (26.4%)
  • Inflation (10.4%)
  • Interest rates and finance (9.6%)
  • Cost of labor (8.8%)
  • Taxes (5.6%)
  • Quality of labor (4.8%).


SPECIAL QUESTION: SUPPLY CHAIN IMPROVEMENTS IN 2012

Manufacturing

We asked a second special question about what supply chain improvements respondents plan to make in 2012. Seventy-four percent stated they plan to take steps during the coming year to improve their supply chain management practices. The five most frequently cited approaches are listed below:

  • Supplier performance management
  • Strategic sourcing/supply base rationalization
  • Demand planning to reduce supply lead times
  • Inventory management and control
  • Process and information systems improvements.
Non-Manufacturing

Responding to the special question regarding supply chain improvements in 2012, 72 percent of non-manufacturing respondents stated that they plan to take steps during the coming year to improve their supply chain management practices. The five most frequently cited approaches are listed below:

  • Supply management/process improvement
  • Leverage new and existing technology
  • Contract management
  • Professional development
  • Strategic sourcing.


INVENTORY-TO-SALES RATIO

Manufacturing

Purchasers will be decreasing inventory on hand, by an average of 1.2 percent, to support their planned level of sales during 2012. In this forecast, 17 percent expect to increase their purchased inventory-to-sales ratio during 2012. This is in contrast to 29 percent who expect the ratio to decrease, and 54 percent who predict no change. The diffusion index of 44 percent indicates the inventory-to-sales ratio will decrease.

Non-Manufacturing

Of the 73 percent of non-manufacturing purchasers who answered this question, 13 percent anticipate increasing their purchased inventory-to-sales ratio during 2012. An additional 19 percent expect their ratio to drop, and 68 percent see no change. The diffusion index of 47 percent suggests the inventory-to-sales ratio will contract in 2012 by an average of 0.4 percent.

Predicted Change in Purchased Inventory-to-Sales Ratio
  Manufacturing Non-Manufacturing
  For 2011
Predicted
Dec 2010
For 2012
Predicted
Dec 2011
For 2011
Predicted
Dec 2010
For 2012
Predicted
Dec 2011
Greater 18% 17% 9% 13%
Same 57% 54% 78% 68%
Smaller 25% 29% 13% 19%
Net Average -0.8% -1.2% -0.1% -0.4%
Diffusion Index 46.5% 44% 48% 47%

Note: A diffusion index above 50 percent would indicate an increase in the inventory-to-sales ratio; below 50 percent, a decrease in the ratio.



OUTLOOK FOR THE NEXT 12 MONTHS

Manufacturing

Survey respondents are somewhat less optimistic about the outlook for 2012, when compared to the outlook for 2011 they predicted in December 2010. The 46 percent who report a better outlook is less than the 57 percent response received in December 2010. The resulting diffusion index for the outlook for 2012 is 65 percent, compared with 74 percent from one year ago when looking forward to 2011.

Non-Manufacturing

Non-manufacturing survey respondents are less optimistic on their outlook now compared to when they looked ahead in December 2010. The 44 percent who currently report a better outlook is less than the 51 percent who had that outlook in December 2010. Thirty-eight percent expect no change, and 18 percent feel the outlook will be worse over the next 12 months.

Outlook — Next 12 Months
  Manufacturing Non-Manufacturing
  Predicted
For 2011
Dec 2010
Predicted
For 2012
Dec 2011
Predicted
For 2011
Dec 2010
Predicted
For 2012
Dec 2011
Better 57% 46% 51% 44%
Same 34% 38% 35% 38%
Worse 9% 16% 14% 18%
Diffusion Index 74% 65% 68.5% 63%


U.S. DOLLAR — Predicted Strength vs. Major Trading Currencies — in 2012 — Manufacturing Only

Manufacturing

Purchasing and supply executives are expecting the strength of the U.S. dollar will weaken very slightly in 2012. The average diffusion index for this forecast is 49.2 percent, an increase of 5.1 percent from the December 2010 forecast average of 44.1 percent for 2011. The U.S. dollar is expected to strengthen against three of the major currencies, weaken against three of the major currencies, and remain the same as one of the major currencies as listed below.

U.S. Dollar Will Be: Euro Canada
$
British
Pound
Japanese
Yen
Mexican
Peso
Korean
Won
Taiwan
$
Stronger than 46% 32% 33% 31% 40% 23% 22%
Same as 14% 37% 34% 33% 43% 38% 38%
Weaker than 40% 31% 33% 36% 17% 39% 40%
Diffusion Index 52.7% 50.5% 50% 48% 61% 41.9% 40.5%

Note: A diffusion index above 50 percent would predict a generally stronger U.S. dollar; below 50 percent, a generally weaker U.S. dollar, with the distance from 50 percent indicative of the predicted strength or weakness.



SUMMARY

Manufacturing

The manufacturing sector is currently expanding, and the forecast indicates that it will continue to expand in the first half of 2012, and at a faster rate in the second half of 2012.

  • Operating rate is currently at 79.2 percent.
  • Production capacity increased by 4.6 percent in 2011.
  • Production capacity is expected to increase by 5.6 percent in 2012.
  • Capital expenditures increased 11 percent in 2011.
  • Capital expenditures are expected to increase 1.9 percent in 2012.
  • Prices paid increased 5.7 percent in 2011.
  • Overall 2012 prices paid are expected to increase 2.9 percent.
  • Labor and benefit costs are expected to increase 2.4 percent in 2012.
  • Manufacturing employment is expected to increase 1.3 percent in 2012.
  • Expect growth in U.S. exports in 2012.
  • Expect growth in U.S. imports in 2012.
  • Manufacturing revenues (nominal) are up 7 percent in 2011.
  • Manufacturing revenues (nominal) are expected to increase 5.5 percent in 2012.
  • The U.S. dollar is expected to weaken slightly on average versus major trading partner currencies in 2012.
  • Overall attitude of manufacturing management: optimistic, with 84 percent of respondents predicting 2012 will be the same as or better than 2011.
Non-Manufacturing

The non-manufacturing sector continues to expand, and the forecast indicates an increased rate of expansion in 2012.

  • Operating rate is currently at 85.2 percent.
  • Production capacity increased 1.1 percent in 2011.
  • Production and provision capacity is expected to increase 3.2 percent in 2012.
  • Capital expenditures increased 4 percent in 2011.
  • Capital expenditures are expected to increase 0.1 percent in 2012.
  • Prices paid increased 2.8 percent in 2011.
  • Prices paid are expected to increase 2.7 percent in 2012.
  • Labor and benefit costs are expected to increase 1.8 percent in 2012.
  • Non-manufacturing employment is expected to increase 1.1 percent in 2012.
  • Expect export levels to increase in 2012.
  • Expect import growth in 2012.
  • Non-manufacturing revenues (nominal) are up 1.5 percent in 2011.
  • Non-manufacturing revenues (nominal) are expected to rise 3.1 percent in 2012.
  • Overall attitude of non-manufacturing supply managers: mostly positive outlook, with 82 percent of respondents predicting 2012 will be the same as or better than 2011.

*Miscellaneous Manufacturing includes items such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies.

**Other Services include services such as equipment and machinery repairing; promoting or administering religious activities; grant making; advocacy; and providing dry-cleaning and laundry services, personal care services, death care services, pet care services, photofinishing services, temporary parking services, and dating services.

In addition to the forecast, the Manufacturing ISM Report On Business® is issued monthly and is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by government agencies and economic business leaders. The report, compiled from responses to questions asked of purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, imports, exports, backlog of orders, employment, customers' inventories, buying policies and prices. The report has been issued by the association since 1931, except during World War II.

Covering the non-manufacturing sector, ISM debuted the Non-Manufacturing ISM Report On Business® in June 1998. The Non-Manufacturing ISM Report On Business® is released on the third business day of each month, and is based on data received from purchasing and supply executives across the country. The report covers business activity, new orders, backlog of orders, new export orders, inventory change, inventory sentiment, imports, prices, employment, and supplier deliveries.

The industries reporting growth, as indicated in the Manufacturing and Non-Manufacturing ISM Report On Business® monthly reports, and in this semiannual forecast, 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.

The Manufacturing and Non-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.

The full text version of each report is posted on ISM's Home Page at www.ism.ws on the first and third business day of every month after 10:10 a.m. (ET).

The next Manufacturing ISM Report On Business® featuring the December 2011 data will be released at 10:00 a.m. (ET) on Tuesday, January 3, 2012.

The next Non-Manufacturing ISM Report On Business® featuring the December 2011 data will be released at 10:00 a.m. (ET) on Thursday, January 5, 2012.



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