FOR RELEASE: April 1, 2004

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

PMI at 62.5%

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 March 2004.

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

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in March for the 10th consecutive month, while the overall economy grew for the 29th 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. "The manufacturing sector had another good month in March as the PMI has now been above the 60 percent mark for five consecutive months. Both New Orders and Production remain strong and have significant momentum going into the second quarter."

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

Comments from purchasing and supply managers are focused on higher energy and material costs, the availability of certain metals and the weaker dollar. As leadtimes extend, their concerns are shifting from cost issues to availability.

ISM's PMI registered 62.5 percent in March, an increase of 1.1 percentage points when compared to 61.4 percent in February. ISM's New Orders Index declined 0.7 percentage point from 66.4 percent in February to 65.7 percent in March. ISM's Production Index increased 1.6 percentage points from 63.9 percent in February to 65.5 percent in March. The ISM Employment Index is at 57 percent for March, an increase of 0.7 percentage point when compared to the 56.3 percent reported in February.

ISM's Supplier Deliveries Index registered 67.9 percent, 5.8 percentage points higher than February's 62.1 percent. ISM's Inventories Index registered 48.3 percent in March, down from the 49.4 percent reported in February. ISM's Customers' Inventories Index for March is at 39.5 percent, an increase of 1 percentage point compared to the February reading of 38.5 percent. ISM's Prices Index in March is 86 percent, 4.5 percentage points higher than the 81.5 percent reported in February.

ISM's Backlog of Orders Index increased 1.5 percentage points, registering 63.5 percent in March compared to 62 percent in February. ISM's New Export Orders Index registered 62 percent, an increase of 7.1 percentage points from February's 54.9 percent. ISM's Imports Index decreased 3.4 percentage points to 56.8 percent in March, down from 60.2 percent in February.

"The first quarter was very strong for the manufacturing sector and the economy overall. Our survey respondents generally indicate that business is quite strong," said Ore.

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

"Aluminum; DRAMs; Electronic Components; Galvanized Steel; Propylene; Stainless Steel; Steel; and Steel, Cold Rolled are the commodities in short supply. Commodities reported up in price are: Aluminum; Aluminum Extrusions; Bearings; Brass; Chemicals; Coal; Copper and Copper Products; Corrugated Containers; Diesel Fuel; Electrical Components; Energy; Fabricated Steel Parts; Fasteners; Freight; Fuel Oil; Fuel Surcharge; Gasoline; HDPE Products; Linerboard; Memory Components; Natural Gas; Nickel; Oil; Pallets; Paper; Particle Board; Petroleum-Based Products; Plastics; Plywood; Polypropylene; Polystyrene; Propylene; Resin; Soybean Oil; Stainless Steel; Stamped Metal Parts; Steel; Steel, Cold Rolled; Steel, Galvanized; Steel, Flat Rolled; Steel, Hot Rolled; Steel Pipe; Steel Scrap; Styrene; Wood Products; and Zinc. The two commodities reported down in price is Caustic Soda and Natural Gas," Ore stated.

MARCH 2004 ISM BUSINESS SURVEY AT A GLANCE

	Series Index	Direction Mar vs Feb	Rate of Change Mar vs Feb
PMI	62.5	Growing	Faster
New Orders	65.7	Growing	Slower
Production	65.5	Growing	Faster
Employment	57.0	Growing	Faster
Supplier Deliveries	67.9	Slowing	Faster
Inventories	48.3	Contracting	Faster
Customers' Inventories	39.5	Too Low	Slower
Prices	86.0	Increasing	Faster
Backlog of Orders	63.5	Growing	Faster
New Export Orders	62.0	Growing	Faster
Imports	56.8	Growing	Slower

THE ECONOMY AT A GLANCE

Overall Economy	Growing	Faster
Manufacturing	Growing	Faster

PMI

The PMI indicates that the manufacturing economy grew in March for the 10th consecutive month. The PMI for March registered 62.5 percent, an increase of 1.1 percentage points compared to the February reading of 61.4 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 March 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 through March (62.5 percent) corresponds to a 7.2 percent increase in real gross domestic product (GDP). Similarly, if the PMI for March (62.5 percent) is annualized, this also corresponds to 7.2 percent increase in GDP.

Month	Mar'04	Feb'04	Jan'04	Dec'03	Nov'03
PMI%	62.5	61.4	63.6	63.4	61.3
Month	Oct'03	Sep'03	Aug'03	Jul'03	Jun'03
PMI%	57.1	54.7	55.0	52.6	50.4
Month	May'03	Apr'03	Mar'03	Feb'03	Jan'03
PMI%	50.0	46.2	46.6	49.4	53.0

New Orders

ISM's New Orders Index grew in March with a reading of 65.7 percent. The index is 0.7 percentage point lower than the 66.4 percent registered in February and is the 11th 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). Nineteen industries report increases for the month of March: Tobacco; Leather; Industrial & Commercial Equipment & Computers; Wood & Wood Products; Transportation & Equipment; Textiles; Paper; Primary Metals; Chemicals; Printing & Publishing; Glass, Stone & Aggregate; Miscellaneous*; Apparel; Fabricated Metals; Electronic Components & Equipment; Rubber & Plastic Products; Instruments & Photographic Equipment; Food; and Furniture.

New Orders	%Better	%Same	%Worse	Net	Index
March 2004	50	41	9	+41	65.7
February 2004	49	41	10	+39	66.4
January 2004	48	40	12	+36	71.1
December 2003	45	42	13	+32	73.1

Production

ISM's Production Index is 65.5 percent in March, 1.6 percentage points higher than the 63.9 percent reported in February, reflecting the 11th 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 industries reporting in March, 19 registered growth: Tobacco; Leather; Apparel; Industrial & Commercial Equipment & Computers; Instruments & Photographic Equipment; Furniture; Primary Metals; Rubber & Plastic Products; Wood & Wood Products; Transportation & Equipment; Glass, Stone & Aggregate; Fabricated Metals; Miscellaneous*; Chemicals; Paper; Electronic Components & Equipment; Textiles; Printing & Publishing; and Food.

Production	%Better	%Same	%Worse	Net	Index
March 2004	46	47	7	+39	65.5
February 2004	44	47	9	+35	63.9
January 2004	44	47	9	+35	71.1
December 2003	44	46	10	+34	69.2

Employment

ISM's Employment Index grew for the fifth consecutive month, following a 37-month trend of contraction. The index registered 57 percent in March compared to 56.3 percent in February, an increase of 0.7 percentage point. The last time the Employment Index registered higher than March'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 March are: Miscellaneous*; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Apparel; Furniture; Electronic Components & Equipment; Textiles; Chemicals; Instruments & Photographic Equipment; Wood & Wood Products; and Rubber & Plastic Products.

Employment	%Higher	%Same	%Lower	Net	Index
March 2004	26	65	9	+17	57.0
February 2004	23	66	11	+12	56.3
January 2004	16	73	11	+5	52.9
December 2003	21	64	15	+6	53.5

Supplier Deliveries

ISM's Supplier Deliveries Index indicates that delivery performance is slower when comparing March to February. March's reading of 67.9 percent is an increase of 5.8 percentage points over February's reading of 62.1 percent. A reading above 50 percent indicates slower deliveries. The 17 industries reporting slower supplier deliveries in March are: Primary Metals; Miscellaneous*; Electronic Components & Equipment; Fabricated Metals; Transportation & Equipment; Instruments & Photographic Equipment; Textiles; Apparel; Paper; Industrial & Commercial Equipment & Computers; Furniture; Printing & Publishing; Wood & Wood Products; Glass, Stone & Aggregate; Food; Chemicals; and Rubber & Plastic Products.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
March 2004	38	59	3	+35	67.9
February 2004	28	70	2	+26	62.1
January 2004	24	72	4	+20	60.4
December 2003	17	81	2	+15	58.6

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

Inventories

Manufacturers' inventories declined in March as the index registered 48.3 percent, a decrease of 1.1 percentage points when compared to February's 49.4 percent. The Inventories Index has registered under 50 percent for 50 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 eight industries reporting higher inventories in March are: Leather; Apparel; Electronic Components & Equipment; Fabricated Metals; Miscellaneous*; Paper; Instruments & Photographic Equipment; and Chemicals.

Inventories	%Higher	%Same	%Lower	Net	Index
March 2004	18	63	19	-1	48.3
February 2004	20	63	17	+3	49.4
January 2004	21	55	24	-3	48.9
December 2003	13	64	23	-10	46.3

Customers' Inventories**

The March Customers' Inventories Index is at 39.5 percent, an increase of 1 percentage point compared to the February reading of 38.5 percent. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 34th consecutive month that the index has registered below 50 percent. Three industries report higher customer inventories during March: Rubber & Plastic Products; Paper; and Primary Metals.

Customers' Inventories	%Reporting	% Too High	% About Right	% Too Low	Net	Index
March 2004	78	8	63	29	-21	39.5
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

Prices**

ISM's Prices Index indicates manufacturers continued to pay higher prices in March. This is the 25th consecutive month the index has registered higher prices. March's index is at 86 percent, 4.5 percentage points higher than February's reading of 81.5 percent. The last time the index registered as high as March's index was in January 1995 when it was also 86 percent. In March, 73 percent of supply executives reported paying higher prices and 1 percent reported paying lower prices, while 26 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 19 industries reporting paying higher prices in March are: Tobacco; Leather; Textiles; Primary Metals; Miscellaneous*; Industrial & Commercial Equipment & Computers; Food; Fabricated Metals; Wood & Wood Products; Transportation & Equipment; Furniture; Glass, Stone & Aggregate; Paper; Electronic Components & Equipment; Chemicals; Rubber & Plastic Products; Apparel; Printing & Publishing; and Instruments & Photographic Equipment.

Prices	%Higher	%Same	%Lower	Net	Index
March 2004	73	26	1	+72	86.0
February 2004	65	33	2	+63	81.5
January 2004	54	43	3	+51	75.5
December 2003	37	58	5	+32	66.0

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 63.5 percent, indicating manufacturers' backlogs in March were higher when compared to February. Of the 87 percent of respondents who report their backlog of orders, 38 percent reported greater backlogs, 11 percent reported smaller backlogs, and 51 percent reported no change from February. The 15 industries reporting an increase in order backlogs during the month are: Apparel; Industrial & Commercial Equipment & Computers; Paper; Wood & Wood Products; Textiles; Glass, Stone & Aggregate; Transportation & Equipment; Primary Metals; Chemicals; Rubber & Plastic Products; Electronic Components & Equipment; Printing & Publishing; Miscellaneous*; Fabricated Metals; and Furniture.

Backlog of Orders	%Reporting	%Greater	%Same	%Less	Net	Index
March 2004	87	38	51	11	+27	63.5
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

New Export Orders

ISM's New Export Orders Index for March registered 62 percent, an increase of 7.1 percentage points when compared to February's index of 54.9 percent. This is the 16th consecutive month of growth in export orders. The 14 industries reporting growth in new export orders in March are: Industrial & Commercial Equipment & Computers; Transportation & Equipment; Textiles; Printing & Publishing; Apparel; Paper; Primary Metals; Electronic Components & Equipment; Chemicals; Rubber & Plastic Products; Instruments & Photographic Equipment; Miscellaneous*; Furniture; and Fabricated Metals.

New Export Orders	%Reporting	%Better	%Same	%Worse	Net	Index
March 2004	77	27	70	3	+24	62.0
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

Imports

Imports of materials by manufacturers grew during March as the Imports Index registered 56.8 percent. However, the index declined 3.4 percentage points when compared to February's index of 60.2 percent, indicating a slower rate of growth. The nine industries reporting growth in import activity for March are: Furniture; Textiles; Industrial & Commercial Equipment & Computers; Transportation & Equipment; Fabricated Metals; Electronic Components & Equipment; Chemicals; Instruments & Photographic Equipment; and Miscellaneous*.

Imports	%Reporting	%Higher	%Same	%Lower	Net	Index
March 2004	79	23	69	8	+15	56.8
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

*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 decreased 8 days to 102 days. Average leadtime for Production Materials decreased 4 days to 45 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies decreased 1 day to 22 days.

	Percent Reporting
	Hand to Mouth	30 Days	60 Days	90 Days	6 Mos.	1 Year+	Avg. Days
Capital Expenditures
March 2004	26	8	13	22	23	8	102
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
Production Materials
March 2004	24	41	19	12	3	1	45
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
MRO Supplies
March 2004	50	39	8	3	0	0	22
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

In Short Supply

Aluminum; DRAMs; Electronic Components — 3rd month; Galvanized Steel; Propylene; Stainless Steel — 3rd month; Steel — 3rd month; and Steel, Cold Rolled — 2nd month.

Up in Price

Aluminum — 5th month; Aluminum Extrusions — 4th month; Bearings; Brass — 5th month; Chemicals — 2nd month; Coal — 2nd month; Copper and Copper Products — 3rd month; Corrugated Containers — 2nd month; Diesel Fuel; Electrical Components — 2nd month; Energy — 3rd month; Fabricated Steel Parts; Fasteners; Freight; Fuel Oil — 3rd month; Fuel Surcharge; Gasoline — 3rd month; HDPE Products — 2nd month; Linerboard; Memory Components; Natural Gas* — 20th month; Nickel — 8th month; Oil; Pallets; Paper; Particle Board — 2nd month; Petroleum-Based Products; Plastics — 2nd month; Plywood; Polypropylene — 2nd month; Polystyrene; Propylene — 3rd month; Resin — 4th month; Soybean Oil; Stainless Steel — 6th month; Stamped Metal Parts; Steel — 6th month; Steel, Cold Rolled — 2nd month; Steel, Galvanized; Steel, Flat Rolled — 2nd month; Steel, Hot Rolled — 3rd month; Steel Pipe — 2nd month; Steel Scrap — 2nd month; Styrene; Wood Products; and Zinc.

Down in Price

Caustic Soda — 3rd month; and Natural Gas* — 2nd month.

*Indicates reports of 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 42.8 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding; below 42.8 percent, it is generally declining. The distance from 50 percent or 42.8 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 April 2004 data will be released at 10:00 a.m. (ET) on May 3, 2004.

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