FOR RELEASE: March 1, 2004

Contact:	Kristen Kioa
	ISM, Media Relations
	Tempe, Arizona
	(800) 888-6276, Ext. 3015

PMI at 61.4%

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 cover only their local vicinity. 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 February 2004.

New Orders, Production, Employment Grow
Inventories Decline
Supplier Deliveries Slower

(Tempe, Arizona) – Economic activity in the manufacturing sector grew in February for the ninth consecutive month, while the overall economy grew for the 28th 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 and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "This month, many respondents are particularly encouraged by the increased breadth of the recovery in manufacturing. All 20 manufacturing industries reported growth. New Orders and Production both decelerated this month, but they are still at very positive levels."

ISM's Backlog of Orders Index indicates that order backlogs increased in February, and the Employment Index grew for the fourth consecutive month. ISM's Prices Index indicates that manufacturers once again experienced higher prices in their purchases, and at the highest rate since February 1995. The New Export Orders and Import Indexes continue to grow, with Imports accelerating during the month.

Comments from purchasing and supply managers have become increasingly optimistic as more and more industries indicate improvement. The general tone of the panel has improved significantly in these first two months of 2004. Their major concerns are steel availability and energy prices.

ISM's PMI registered 61.4 percent in February, a decrease of 2.2 percentage points when compared to 63.6 percent in January. ISM's New Orders Index declined 4.7 percentage points from 71.1 percent in January to 66.4 percent in February. ISM's Production Index declined 7.2 percentage points from 71.1 percent in January to 63.9 percent in February. The ISM Employment Index is at 56.3 percent for February, an increase of 3.4 percentage points when compared to the 52.9 percent reported in January.

ISM's Supplier Deliveries Index registered 62.1 percent, 1.7 percentage points higher than January's 60.4 percent. ISM's Inventories Index registered 49.4 percent in February, up from the 48.9 percent reported in January. ISM's Customers' Inventories Index for February is at 38.5 percent, a decrease of 1.5 percentage points compared to the January reading of 40 percent. ISM's Prices Index in February is 81.5 percent, 6 percentage points higher than the 75.5 percent reported in January.

ISM's Backlog of Orders Index increased 1.5 percentage points, registering 62 percent in February compared to 60.5 percent in January. ISM's New Export Orders Index registered 54.9 percent, a decrease of 2.6 percentage points from January's 57.5 percent. ISM's Imports Index increased 0.7 percentage point to 60.2 percent in February, up from 59.5 percent in January.

"Taking into account the fact that all 20 industries reported growth in February, combined with a manufacturing economy that has been growing for the past nine months, it appears that the manufacturing sector has sustainable momentum at this point," said Ore.

Of the 20 industries in the manufacturing sector, all industries reported growth: Instruments & Photographic Equipment; Textiles; Miscellaneous*; Primary Metals; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Chemicals; Apparel; Rubber & Plastic Products; Tobacco; Transportation & Equipment; Wood & Wood Products; Glass, Stone, & Aggregate; Petroleum; Fabricated Metals; Food; Paper; Leather; Printing & Publishing; and Furniture.

"Electronic Components; Stainless Steel; Steel; Steel, Hot Rolled; Steel, Cold Rolled, and Steel sheet are the commodities in short supply. Commodities reported up in price are: Acetone, Aluminum; Aluminum Extrusions; Brass and Brass Products; Chemicals; Coal; Copper and Copper Products; Corrugated; Electrical Components; Energy; Ethylene; Ethylene Oxide; Fuel Oil; Gasoline; HDPE Products; Lumber; Metals; Natural Gas; Nickel; Particle Board; Plastics; Polyethylene; Polyethylene Resin; Polypropylene; Propylene; Pulp; Resin; Stainless Steel; Steel; Steel, Cold Rolled; Steel, Flat Rolled; Steel, Hot Rolled; Steel Pipe; Steel Sheet; and Steel Scrap. The commodities reported down in price are Caustic Soda; Corrugated Cartons; Natural Gas; and Packaging Materials. Natural Gas was listed as both up and down in price," Ore stated.

FEBRUARY 2004 ISM BUSINESS SURVEY AT A GLANCE

	Series Index	Direction Jan vs Dec	Rate of Change Jan vs Dec
PMI	61.4	Growing	Slower
New Orders	66.4	Growing	Slower
Production	63.9	Growing	Slower
Employment	56.3	Growing	Faster
Supplier Deliveries	62.1	Slowing	Faster
Inventories	49.4	Contracting	Slower
Customers' Inventories	38.5	Too Low	Faster
Prices	81.5	Increasing	Faster
Backlog of Orders	62.0	Growing	Faster
New Export Orders	54.9	Growing	Slower
Imports	60.2	Growing	Faster

THE ECONOMY AT A GLANCE

Overall Economy	Growing	Slower
Manufacturing	Growing	Slower

PMI

The PMI indicates that the manufacturing economy grew in February for the ninth consecutive month. The PMI for February registered 61.4 percent, a decrease of 2.2 percentage points compared to the January reading of 63.6 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 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. The February 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 average PMI for January and February (62.5 percent) corresponds to a 7.2 percent increase in real gross domestic product (GDP). However, if the PMI for February (61.4 percent) is annualized, this corresponds to a 6.8 percent increase in GDP.

Month	Feb'04	Jan'04	Dec'03	Nov'03	Oct'03
PMI%	61.4	63.6	63.4	61.3	57.1
Month	Sep'03	Aug'03	Jul'03	Jun'03	May'03
PMI%	54.7	55.0	52.6	50.4	50.0
Month	Apr'03	Mar'03	Feb'03	Jan'03	Dec'02
PMI%	46.2	46.6	49.4	53.0	53.3

New Orders

ISM's New Orders Index grew in February with a reading of 66.4 percent. The index is 4.7 percentage points lower than the 71.1 percent registered in January and is the 10th consecutive month the index has exceeded 50 percent. A New Orders Index above 51 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars). Eighteen industries report increases for the month of February: Textiles; Petroleum; Instruments & Photographic Equipment; Apparel; Primary Metals; Rubber & Plastic Products; Chemicals; Glass, Stone, & Aggregate; Miscellaneous*; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Food; Wood & Wood Products; Furniture; Transportation & Equipment; Paper; Fabricated Metals; and Printing & Publishing.

New Orders	%Better	%Same	%Worse	Net	Index
February 2004	49	41	10	+39	66.4
January 2004	48	40	12	+36	71.1
December 2003	45	42	13	+32	73.1
November 2003	45	43	12	+33	71.4

Production

ISM's Production Index is 63.9 percent in February, 7.2 percentage points lower than the 71.1 percent reported in January, reflecting the 10th consecutive month of growth. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the 20 industries reporting in February, 18 registered growth: Tobacco; Textiles; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Miscellaneous*; Primary Metals; Chemicals; Electronic Components & Equipment; Rubber & Plastic Products; Apparel; Food; Transportation & Equipment; Glass, Stone, & Aggregate; Wood & Wood Products; Furniture; Printing & Publishing; Paper; and Fabricated Metals.

Production	%Better	%Same	%Worse	Net	Index
February 2004	44	47	9	+35	63.9
January 2004	44	47	9	+35	71.1
December 2003	44	46	10	+34	69.2
November 2003	40	49	11	+29	65.6

Employment

ISM's Employment Index grew for the fourth consecutive month, following a 37-month trend of contraction. The index registered 56.3 percent in February compared to 52.9 percent in January, an increase of 3.4 percentage points. The last time the Employment Index registered higher than February's index was in December 1987, registering 59.1 percent. An Employment Index above 48 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The 11 industries reporting growth in employment during February are: Instruments & Photographic Equipment; Apparel; Electronic Components & Equipment; Transportation & Equipment; Wood & Wood Products; Industrial & Commercial Equipment & Computers; Textiles; Miscellaneous*; Chemicals; Printing & Publishing; and Fabricated Metals.

Employment	%Higher	%Same	%Lower	Net	Index
February 2004	23	66	11	+12	56.3
January 2004	16	73	11	+5	52.9
December 2003	21	64	15	+6	53.5
November 2003	16	66	18	-2	50.8

Supplier Deliveries

ISM's Supplier Deliveries Index indicates that delivery performance is slower when comparing February to January. February's reading of 62.1 percent is an increase of 1.7 percentage points over January's reading of 60.4 percent. A reading above 50 percent indicates slower deliveries. The 14 industries reporting slower supplier deliveries in February are: Instruments & Photographic Equipment; Fabricated Metals; Electronic Components & Equipment; Textiles; Miscellaneous*; Primary Metals; Industrial & Commercial Equipment & Computers; Transportation & Equipment; Wood & Wood Products; Furniture; Chemicals; Paper; Printing & Publishing; and Rubber & Plastic Products.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
February 2004	28	70	2	+26	62.1
January 2004	24	72	4	+20	60.4
December 2003	17	81	2	+15	58.6
November 2003	14	82	4	+10	56.0

NOTE: A list of commodities in short supply is available at the end of this report.

Inventories

Manufacturers' inventories declined in February as the index registered 49.4 percent, an increase of 0.5 percentage point when compared to January's 48.9 percent. The Inventories Index has registered under 50 percent for 49 consecutive months. An Inventories Index greater than 42.3 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in constant 1987 dollars). The 10 industries reporting higher inventories in February are: Petroleum; Leather; Fabricated Metals; Rubber & Plastic Products; Paper; Miscellaneous*; Transportation & Equipment; Primary Metals; Chemicals; and Furniture.

Inventories	%Higher	%Same	%Lower	Net	Index
February 2004	20	63	17	+3	49.4
January 2004	21	55	24	-3	48.9
December 2003	13	64	23	-10	46.3
November 2003	16	62	22	-6	49.6

Customers' Inventories**

The Customers' Inventories Index is at 38.5 percent, a decrease of 1.5 percentage points compared to the January reading of 40 percent. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 33rd consecutive month that the index has registered below 50 percent. No industry is reporting excessive customers' inventories during February.

Customers' Inventories	%Reporting	% Too High	% About Right	% Too Low	Net	Index
February 2004	76	7	63	30	-23	38.5
January 2004	72	7	66	27	-20	40.0
December 2003	74	5	68	27	-22	39.0
November 2003	77	8	63	29	-21	39.5

Prices**

ISM's Prices Index indicates manufacturers continued to pay higher prices in February. This is the 24th consecutive month the index has registered higher prices. February's index is at 81.5 percent, 6 percentage points higher than January's reading of 75.5 percent. The last time the index registered higher than February's index was in February 1995, when it registered 81.7 percent. In February, 65 percent of supply executives reported paying higher prices and 2 percent reported paying lower prices, while 33 percent reported that prices were unchanged from the preceding month.

A Prices Index below 46.9 percent, over time, is generally consistent with a decrease in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The 18 industries reporting paying higher prices in February are: Tobacco; Leather; Fabricated Metals; Textiles; Wood & Wood Products; Primary Metals; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; Food; Chemicals; Transportation & Equipment; Furniture; Apparel; Miscellaneous*; Electronic Components & Equipment; Instruments & Photographic Equipment; Paper; and Printing & Publishing.

Prices	%Higher	%Same	%Lower	Net	Index
February 2004	65	33	2	+63	81.5
January 2004	54	43	3	+51	75.5
December 2003	37	58	5	+32	66.0
November 2003	33	62	5	+28	64.0

NOTE: A list of commodities up in price and down in price is available at the end of this report.

Backlog of Orders**

ISM's Backlog of Orders Index registered 62 percent, indicating manufacturers' backlogs in February were higher when compared to January. Of the 85 percent of respondents who report their backlog of orders, 35 percent reported greater backlogs, 11 percent reported smaller backlogs, and 54 percent reported no change from January. The 14 industries reporting an increase in order backlogs during the month are: Apparel; Primary Metals; Miscellaneous*; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; Chemicals; Paper; Electronic Components & Equipment; Food; Instruments & Photographic Equipment; Transportation & Equipment; Fabricated Metals; Wood & Wood Products; and Furniture.

Backlog of Orders	%Reporting	%Greater	%Same	%Less	Net	Index
February 2004	85	35	54	11	+24	62.0
January 2004	90	34	53	13	+21	60.5
December 2003	88	34	54	12	+22	61.0
November 2003	86	33	52	15	+18	59.0

New Export Orders

ISM's New Export Orders Index for February registered 54.9 percent, a decrease of 2.6 percentage points when compared to January's index of 57.5 percent. This is the 15th consecutive month of growth in export orders. The nine industries reporting growth in new export orders in February are: Instruments & Photographic Equipment; Paper; Apparel; Chemicals; Industrial & Commercial Equipment & Computers; Miscellaneous*; Printing & Publishing; Primary Metals; and Electronic Components & Equipment.

New Export Orders	%Reporting	%Better	%Same	%Worse	Net	Index
February 2004	77	17	75	8	+9	54.9
January 2004	75	21	72	7	+14	57.5
December 2003	77	22	72	6	+16	60.0
November 2003	77	20	74	6	+14	57.1

Imports

Imports of materials by manufacturers grew during February as the Imports Index registered 60.2 percent. The index increased 0.7 percentage point when compared to January's index of 59.5 percent. The 14 industries reporting growth in import activity for February are: Apparel; Wood & Wood Products; Electronic Components & Equipment; Transportation & Equipment; Primary Metals; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Food; Chemicals; Furniture; Paper; Rubber & Plastic Products; Fabricated Metals; and Miscellaneous*.

Imports	%Reporting	%Higher	%Same	%Lower	Net	Index
February 2004	78	22	73	5	+17	60.2
January 2004	77	21	74	5	+16	59.5
December 2003	78	23	69	8	+15	58.1
November 2003	78	26	69	5	+21	61.0

*Miscellaneous is a preponderance of jewelry, toys, sporting goods, and musical instruments.

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

Buying Policy

Average commitment leadtime for Capital Expenditures increased 2 days to 110 days. Average leadtime for Production Materials decreased 1 day to 49 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies increased 1 day to 23 days.

	Percent Reporting
	Hand to Mouth	30 Days	60 Days	90 Days	6 Mos.	1 Year+	Avg. Days
Capital Expenditures
February 2004	24	11	11	18	26	10	110
January 2004	21	10	12	23	26	8	108
December 2003	27	11	12	20	21	9	100
November 2003	25	7	17	21	21	9	103
Production Materials
February 2004	20	40	24	10	5	1	49
January 2004	20	42	21	12	3	2	50
December 2003	23	41	19	11	4	2	49
November 2003	25	44	19	7	4	1	43
MRO Supplies
February 2004	55	33	9	1	2	0	23
January 2004	53	35	9	2	1	0	22
December 2003	54	36	7	2	1	0	21
November 2003	57	34	5	3	1	0	21

In Short Supply

Electronic Components — 2nd month; Stainless Steel; Steel — 2nd month; Steel, Cold Rolled; Steel, Hot Rolled; and Steel, Sheet — 2nd month.

Up in Price

Acetone; Aluminum — 4th month; Aluminum Extrusions — 3rd month; Brass and Brass Products — 4th month; Chemicals; Coal; Copper and Copper Products — 2nd month; Corrugated; Electrical Components; Energy — 2nd month; Ethylene — 3rd month; Ethylene Oxide: Fuel Oil — 2nd month; Gasoline — 2nd month; HDPE Products; Lumber; Metals; Natural Gas* — 19th month; Nickel — 7th month; Particle Board; Plastics; Polyethylene — 2nd month; Polyethylene Resin; Polypropylene; Propylene — 2nd month; Pulp; Resin — 3rd month; Stainless Steel — 5th month; Steel — 5th month; Steel, Cold Rolled; Steel, Flat Rolled; Steel, Hot Rolled — 2nd month; Steel Pipe; Steel Scrap; and Steel Sheet — 2nd month.

Down in Price

Caustic Soda — 2nd month; Corrugated Cartons — 12th month; Natural Gas*; and Packaging Materials.

*Reported as both up and down in price.

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 monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. Membership of the Business Survey Committee is diversified by Standard Industrial Classification (SIC) category, based on each industry's contribution to Gross Domestic Product (GDP). Twenty industries from various U.S. geographical areas are represented on the committee. The 20 manufacturing Standard Industry Classification codes are: Food; Tobacco; Textiles; Apparel; Wood & Wood Products; Furniture; Paper; Printing & Publishing; Chemicals; Petroleum; Rubber & Plastic Products; Leather; Glass, Stone, & Aggregate; Primary Metals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Transportation & Equipment; Instruments & Photographic Equipment; and Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments).

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 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 indices for five of the indicators with varying weights: New Orders – 30%; Production – 25%; Employment – 20%; Supplier Deliveries – 15%; and Inventories – 10%.

Diffusion indices 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 that it is generally declining. A PMI over 42.9 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding; below 42.9 percent, it is generally declining. The distance from 50 percent or 42.9 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 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.

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 world's leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. The 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 March 2004 data will be released at 10:00 a.m. (ET) on April 1, 2004.

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