FOR RELEASE: May 2, 2005

Contact:	Terri Tracey
	ISM, Media Relations
	Tempe, Arizona
	800/888-6276, Ext. 3071
	E-mail: ttracey@ism.ws

PMI at 53.3%

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 April 2005.

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New Orders, Production, Employment Expanding
Prices Increasing

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in April for the 23rd consecutive month, while the overall economy grew for the 42nd 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. "In April, the manufacturing sector grew for the 23rd consecutive month based on the ISM data. This represents the longest period of growth in the last 16 years. However, the rate of growth slowed to its lowest level since July 2003. The trend is definitely toward a slower pace of growth, and that should relieve some of the pricing pressure that the sector has experienced during 2004 and year to date in 2005. Declines in Inventories indicate that manufacturers are adjusting to slower growth in new orders."

TOP PERFORMING INDUSTRIES

The 14 industries reporting growth in April — listed in order — are: Wood & Wood Products; Miscellaneous*; Rubber & Plastic Products; Instruments & Photographic Equipment; Furniture; Leather; Glass, Stone & Aggregate; Industrial & Commercial Equipment & Computers; Chemicals; Food; Tobacco; Fabricated Metals; Primary Metals; and Transportation & Equipment. Petroleum is the only industry reporting the same level of activity as last month. The industries reporting decreased activity in April are: Apparel; Paper; Electronic Components & Equipment; Printing & Publishing; and Textiles.

WHAT RESPONDENTS ARE SAYING ...

• "Very strong business conditions. Record sales levels." (Electronics)
• "Business is mixed, robust in some areas, softening in others." (Electronics)
• "Many of our customers have shifted away from USA-made and now 'direct import' from Asia. Our sales have been very spotty this quarter." (Fabricated Metals)
• "Promotions have been the driving force to retain market share." (Food)
• "Steel prices continue to abate. More and more companies are accelerating their offshore initiatives to combat the raw material increases in the U.S." (Furniture)

MANUFACTURING AT A GLANCE APRIL 2005
Index	Series Index April	Series Index March	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	53.3	55.2	-1.9	Growing	Slower	23
New Orders	53.7	57.1	-3.4	Growing	Slower	24
Production	56.7	56.5	+0.2	Growing	Faster	24
Employment	52.3	53.3	-1.0	Growing	Slower	18
Supplier Deliveries	51.5	52.5	-1.0	Slowing	Slower	22
Inventories	47.9	54.1	-6.2	Contracting	From Growing	1
Customers' Inventories	41.5	46.0	-4.5	Contracting	Faster	47
Prices	71.0	73.0	-2.0	Increasing	Slower	38
Backlog of Orders	53.0	56.0	-3.0	Growing	Slower	5
Exports	57.2	55.4	+1.8	Growing	Faster	40
Imports	56.7	58.9	-2.2	Growing	Slower	41
OVERALL ECONOMY				Growing	Slower	42
Manufacturing Sector				Growing	Slower	23

*Number of months moving in current direction

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

Commodities Up in Price

Aluminum (18); Aluminum Extrusions; Beef; Butadiene; Caustic Soda (12); Chemicals (15); Coal; Copper (7); Corrugated Containers (15); Diesel Fuel (8); Energy (3); Freight (14); Fuel (3); Fuel Oil (2); Fuel Surcharges; Gasoline (3); Glass; LDPE; Machined Components (2); Natural Gas (33); Paper (14); PET; Petroleum-Based Products (2); Plastic Products (various forms) (15); Plastic Resin (3); Plastics (9); PVC; Resins (9); Rubber-Based Products; Steel* (19); Titanium (2); Titanium Dioxide; Wood (2); and Wood Pulp.

Commodities Down in Price

Steel (2).*

Commodities in Short Supply

Caustic Soda (3); and Steel (16).

*Reported as both up and down in price.

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

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APRIL 2005 MANUFACTURING INDEX SUMMARIES

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PMI

The PMI indicates that the manufacturing economy grew in April for the 23rd consecutive month. The PMI for April registered 53.3 percent, a decrease of 1.9 percentage points when compared to March's reading of 55.2 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 42.7 percent, over a period of time, generally indicates an expansion of the overall economy. The April 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 April (55.1 percent) corresponds to a 4.5 percent increase in gross domestic product (GDP) on an annual basis. In addition, if the PMI for April (53.3 percent) is annualized, it corresponds to a 3.8 percent increase in GDP annually.

THE LAST 12 MONTHS

Month	PMI		Month	PMI
Apr 2005	53.3		Oct 2004	57.5
Mar 2005	55.2		Sep 2004	59.1
Feb 2005	55.3		Aug 2004	59.6
Jan 2005	56.4		Jul 2004	61.6
Dec 2004	57.3		Jun 2004	61.2
Nov 2004	57.6		May 2004	62.6
Average for 12 months – 58.1 High – 62.6 Low – 53.3

New Orders

ISM's New Orders Index grew in April with a reading of 53.7 percent. The index is 3.4 percentage points lower than the 57.1 percent registered in March, and it is the 24th consecutive month the index has exceeded 50 percent. A New Orders Index above 51.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars). Eleven industries reported increases for the month of April: Wood & Wood Products; Instruments & Photographic Equipment; Glass, Stone & Aggregate; Miscellaneous*; Furniture; Rubber & Plastic Products; Chemicals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Food; and Transportation & Equipment.

New Orders	%Better	%Same	%Worse	Net	Index
Apr 2005	34	49	17	+17	53.7
Mar 2005	37	49	14	+23	57.1
Feb 2005	34	48	18	+16	55.8
Jan 2005	34	44	22	+12	56.5

Production

ISM's Production Index is 56.7 percent in April, 0.2 percentage point higher than the 56.5 percent reported in March. April is the 24th consecutive month of growth in the index. An index above 50 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in April, 15 registered growth: Leather; Wood & Wood Products; Tobacco; Instruments & Photographic Equipment; Miscellaneous*; Chemicals; Rubber & Plastic Products; Furniture; Industrial & Commercial Equipment & Computers; Textiles; Glass, Stone & Aggregate; Primary Metals; Food; Fabricated Metals; and Transportation & Equipment.

Production	%Better	%Same	%Worse	Net	Index
Apr 2005	35	50	15	+20	56.7
Mar 2005	34	51	15	+19	56.5
Feb 2005	32	54	14	+18	56.7
Jan 2005	30	54	16	+14	57.8

Employment

ISM's Employment Index grew for the 18th consecutive month, following a 37-month trend of contraction. The index registered 52.3 percent in April compared to 53.3 percent in March, a decrease of 1 percentage point. An Employment Index above 48.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The nine industries reporting growth in employment during April are: Miscellaneous*; Wood & Wood Products; Rubber & Plastic Products; Food; Furniture; Industrial & Commercial Equipment & Computers; Primary Metals; Transportation & Equipment; and Instruments & Photographic Equipment.

Employment	%Higher	%Same	%Lower	Net	Index
Apr 2005	20	67	13	+7	52.3
Mar 2005	21	67	12	+9	53.3
Feb 2005	22	69	9	+13	57.4
Jan 2005	23	67	10	+13	58.1

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower for the 22nd consecutive month in April. ISM's Supplier Deliveries Index for April registered 51.5 percent, a decrease of 1 percentage point compared to March's reading of 52.5 percent. A reading above 50 percent indicates slower deliveries. The 10 industries reporting slower supplier deliveries in April are: Apparel; Rubber & Plastic Products; Paper; Glass, Stone & Aggregate; Furniture; Primary Metals; Wood & Wood Products; Instruments & Photographic Equipment; Chemicals; and Industrial & Commercial Equipment & Computers.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
Apr 2005	14	76	10	+4	51.5
Mar 2005	13	81	6	+7	52.5
Feb 2005	14	80	6	+8	53.9
Jan 2005	13	79	8	+5	53.7

NOTE: A list of commodities in short supply is available on page 2 of this report.

Inventories

Manufacturers' inventories declined in April following a one-month increase as ISM's Inventories Index registered 47.9 percent, down 6.2 percentage points when compared to March's 54.1 percent. 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 chained 2000 dollars). The six industries reporting higher inventories in April are: Wood & Wood Products; Furniture; Industrial & Commercial Equipment & Computers; Food; Chemicals; and Transportation & Equipment.

Inventories	%Higher	%Same	%Lower	Net	Index
Apr 2005	17	63	20	-3	47.9
Mar 2005	26	58	16	+10	54.1
Feb 2005	19	64	17	+2	48.6
Jan 2005	20	67	13	+7	52.8

Customers' Inventories**

The April Customers' Inventories Index is at 41.5 percent, 4.5 percentage points lower compared to the 46 percent reported in March. Respondents indicate that their customers do not have sufficient inventories on hand (inventories are too low) at this time. This is the 47th consecutive month that the index has registered below 50 percent. Four industries reported higher customers' inventories during April and they are: Furniture; Miscellaneous*; Electronic Components & Equipment; and Chemicals.

Customers' Inventories	% Reporting	%Too High	%About Right	%Too Low	Net	Index
Apr 2005	68	10	63	27	-17	41.5
Mar 2005	77	11	70	19	-8	46.0
Feb 2005	69	8	69	23	-15	42.5
Jan 2005	71	8	73	19	-11	44.5

Prices**

ISM's Prices Index indicates manufacturers continue to pay higher prices in April. This is the 38th consecutive month the index has registered higher prices. April's index is at 71 percent, 2 percentage points lower than March's reading of 73 percent. In April, 52 percent of supply executives reported paying higher prices and 10 percent reported paying lower prices, while 38 percent reported that prices were unchanged from the preceding month.

A Prices Index above 47.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In April, 18 industries reported paying higher prices: Tobacco; Petroleum; Leather; Glass, Stone & Aggregate; Textiles; Transportation & Equipment; Printing & Publishing; Chemicals; Paper; Instruments & Photographic Equipment; Furniture; Primary Metals; Electronic Components & Equipment; Rubber & Plastic Products; Wood & Wood Products; Industrial & Commercial Equipment & Computers; Miscellaneous*; and Food.

Prices	%Higher	%Same	%Lower	Net	Index
Apr 2005	52	38	10	+42	71.0
Mar 2005	51	44	5	+46	73.0
Feb 2005	38	55	7	+31	65.5
Jan 2005	45	48	7	+38	69.0

NOTE: A list of commodities up in price and down in price is available on page 2 of this report.

Backlog of Orders**

ISM's Backlog of Orders Index registered 53 percent, indicating manufacturers' backlogs in April are growing at a slower rate when compared to March. Of the 87 percent of respondents who report their backlog of orders, 25 percent reported greater backlogs, 19 percent reported smaller backlogs, and 56 percent reported no change from March. The 11 industries reporting an increase in order backlogs during the month are: Wood & Wood Products; Apparel; Furniture; Textiles; Glass, Stone & Aggregate; Miscellaneous*; Industrial & Commercial Equipment & Computers; Fabricated Metals; Instruments & Photographic Equipment; Food; and Transportation & Equipment.

Backlog of Orders	% Reporting	%Greater	%Same	%Less	Net	Index
Apr 2005	87	25	56	19	+6	53.0
Mar 2005	86	29	54	17	+12	56.0
Feb 2005	84	21	59	20	+1	50.5
Jan 2005	84	26	49	25	+1	50.5

New Export Orders

ISM's New Export Orders Index for April registered 57.2 percent, an increase of 1.8 percentage points when compared to March's index of 55.4 percent. This is the 40th consecutive month of growth in export orders. The 11 industries reporting growth in new export orders in April are: Tobacco; Food; Chemicals; Instruments & Photographic Equipment; Printing & Publishing; Industrial & Commercial Equipment & Computers; Transportation & Equipment; Paper; Rubber & Plastic Products; Fabricated Metals; and Electronic Components & Equipment.

New Export Orders	% Reporting	%Higher	%Same	%Lower	Net	Index
Apr 2005	76	23	71	6	+17	57.2
Mar 2005	77	19	76	5	+14	55.4
Feb 2005	76	19	74	7	+12	57.4
Jan 2005	78	18	77	5	+13	56.9

Imports

Imports of materials by manufacturers grew during April as the Imports Index registered 56.7 percent. The index decreased 2.2 percentage points when compared to March's index of 58.9 percent, indicating a slower rate of growth. The 13 industries reporting growth in import activity for April are: Miscellaneous*; Printing & Publishing; Furniture; Textiles; Industrial & Commercial Equipment & Computers; Glass, Stone & Aggregate; Transportation & Equipment; Wood & Wood Products; Electronic Components & Equipment; Rubber & Plastic Products; Instruments & Photographic Equipment; Fabricated Metals; and Chemicals.

Imports	% Reporting	%Higher	%Same	%Lower	Net	Index
Apr 2005	79	22	72	6	+16	56.7
Mar 2005	81	21	76	3	+18	58.9
Feb 2005	77	25	69	6	+19	60.7
Jan 2005	79	23	74	3	+20	61.1

*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 rose 7 days to 110 days. Average leadtime for Production Materials rose 4 days to 50 days. Average leadtime for Maintenance, Repair and Operating (MRO) supplies rose 1 day to 22 days.

Percent Reporting

Capital Expenditures	Hand-to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
April 2005	26	7	13	20	23	11	110
March 2005	25	10	13	21	22	9	103
February 2005	23	10	13	19	24	11	112
January 2005	23	11	12	21	24	9	106
Production Materials	Hand-to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
April 2005	23	36	24	12	3	2	50
March 2005	20	43	23	10	3	1	46
February 2005	21	40	22	12	4	1	48
January 2005	22	42	21	11	3	1	45
MRO Supplies	Hand-to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
April 2005	52	36	9	3	0	0	22
March 2005	54	34	10	2	0	0	21
February 2005	53	34	10	2	1	0	22
January 2005	56	31	11	2	0	0	21

About this Report

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

Data and Method of Presentation

The Manufacturing ISM Report On Business® is based on data compiled from 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 and 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 indexes for five of the indicators with varying weights: New Orders &150; 30%; Production &150; 25%; Employment &150; 20%; Supplier Deliveries &150; 15%; and Inventories &150; 10%.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 42.7 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.7 percent, it is generally declining. The distance from 50 percent or 42.7 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

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

The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management™. The Institute for Supply Management™, established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM Report On Business® is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).

The next Manufacturing ISM Report On Business® featuring the May 2005 data will be released at 10:00 a.m. (ET) on June 1, 2005.

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