FOR RELEASE: March 1, 2007

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

PMI at 52.3%

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 contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of February 2007.

New Orders, Production and Employment Growing
Inventories Contracting
Deliveries Slowing

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in February following a decline in January, while the overall economy grew for the 64th 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. "February proved to be a good month in the manufacturing sector as New Orders, Production and Employment contributed to a solid growth scenario. The Inventories Index showed significant reduction in manufacturers' inventories for the second consecutive month, and the Backlog of Orders Index is growing once again. While the prices manufacturers pay reached their highest level in five months, concern about prices is still minimal due to the small number of commodities indicated as up in price. The trend in manufacturing, as well as the overall economy, is for slow but continuing growth."

TOP PERFORMING INDUSTRIES

The 13 industries reporting growth in February — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Wood Products; Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; Paper Products; Food, Beverage & Tobacco Products; and Machinery.

WHAT RESPONDENTS ARE SAYING ...

• "Business is booming in the fertilizer business." (Chemical Products)
• "Business continues to be strong but flat. Goals were all met for the month except inventory is too high according to budget." (Fabricated Metal Products)
• "Our business has continued at a fairly level pace since September 2006." (Computer & Electronic Products)
• "Although our business is still depressed, we are seeing increased order activity for single pieces of equipment compared to complete system solutions as in the past." (Machinery)
• "Business has slowed a little. Leadtimes for MRO parts are still longer than a year ago." (Nonmetallic Mineral Products)

MANUFACTURING AT A GLANCE FEBRUARY 2007
Index	Series Index February	Series Index January	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	52.3	49.3	+3.0	Growing	From Contracting	1
New Orders	54.9	50.3	+4.6	Growing	Faster	3
Production	54.1	49.6	+4.5	Growing	From Contracting	1
Employment	51.1	49.5	+1.6	Growing	From Contracting	1
Supplier Deliveries	50.8	52.7	-1.9	Slowing	Slower	44
Inventories	44.6	39.9	+4.7	Contracting	Slower	7
Customers' Inventories	53.0	52.0	+1.0	Too High	Faster	5
Prices	59.0	53.0	+6.0	Increasing	Faster	2
Backlog of Orders	51.5	43.5	+8.0	Growing	From Contracting	1
Exports	54.0	52.5	+1.5	Growing	Faster	51
Imports	61.5	54.5	+7.0	Growing	Faster	62
OVERALL ECONOMY				Growing	Faster	64
Manufacturing Sector				Growing	From Contracting	1

*Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum (3); Corn Products (4); Gasoline; Natural Gas; Nickel (4); Stainless Steel (2); and Stainless Steel Sheet (2).

Commodities Down in Price

Caustic Soda and Copper (3).

Commodities in Short Supply

Electronic Components is the only commodity reported in short supply.

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

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FEBRUARY 2007 MANUFACTURING INDEX SUMMARIES

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PMI

The manufacturing economy returned to growth in February as the PMI registered 52.3 percent, an increase of 3 percentage points when compared to January's seasonally adjusted reading of 49.3 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that both the overall economy and the manufacturing sector are growing. "The past relationship between the PMI and the overall economy indicates that the PMI average for January and February (50.8 percent) corresponds to a 2.8 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for February (52.3) is annualized, it corresponds to a 3.2 percent increase in real GDP annually."

THE LAST 12 MONTHS

Month	PMI		Month	PMI
Feb 2007	52.3		Aug 2006	54.3
Jan 2007	49.3		Jul 2006	54.4
Dec 2006	51.4		Jun 2006	54.0
Nov 2006	49.9		May 2006	54.7
Oct 2006	51.5		Apr 2006	56.9
Sep 2006	52.7		Mar 2006	55.3
Average for 12 months – 53.1 High – 56.9 Low – 49.3

New Orders

ISM's New Orders Index registered 54.9 percent in February. The index is 4.6 percentage points higher than the seasonally adjusted 50.3 percent reported in January. A New Orders Index above 49.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars). Thirteen industries reported increases during February: Apparel, Leather & Allied Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Textile Mills; Wood Products; Computer & Electronic Products; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Paper Products.

New Orders	% Better	% Same	% Worse	Net	Index
Feb 2007	36	43	21	+15	54.9
Jan 2007	27	45	28	-1	50.3
Dec 2006	30	37	33	-3	51.9
Nov 2006	22	51	27	-5	49.7

Production

ISM's Production Index registered 54.1 percent in February, 4.5 percentage points higher than the seasonally adjusted 49.6 percent reported in January. Manufacturers' production is now growing following a one-month contraction in February. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in February, 11 registered growth: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; Paper Products; Transportation Equipment; Computer & Electronic Products; and Food, Beverage & Tobacco Products.

Production	% Better	% Same	% Worse	Net	Index
Feb 2007	28	54	18	+10	54.1
Jan 2007	22	53	25	-3	49.6
Dec 2006	27	46	27	0	52.4
Nov 2006	18	60	22	-4	49.3

Employment

ISM's Employment Index registered 51.1 percent in February as the Index increased 1.6 percentage points when compared to January's seasonally adjusted reading of 49.5 percent. February's Index reverses a three-month trend of contraction in manufacturing employment. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The eight industries reporting growth in employment during February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Chemical Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Paper Products; Computer & Electronic Products; and Transportation Equipment.

Employment	% Higher	% Same	% Lower	Net	Index
Feb 2007	21	62	17	+4	51.1
Jan 2007	14	68	18	-4	49.5
Dec 2006	14	68	18	-4	49.4
Nov 2006	17	63	20	-3	48.9

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower for the 44th consecutive month in February. ISM's Supplier Deliveries Index registered 50.8 percent in February, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 52.7 percent. A reading above 50 percent indicates slower deliveries. The six industries reporting slower supplier deliveries in February are: Nonmetallic Mineral Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Chemical Products.

Supplier Deliveries	% Slower	% Same	% Faster	Net	Index
Feb 2007	7	87	6	+1	50.8
Jan 2007	7	88	5	+2	52.7
Dec 2006	8	88	4	+4	53.3
Nov 2006	9	86	5	+4	52.8

Inventories

Manufacturers' inventories contracted for the seventh consecutive month in February as ISM's Inventories Index registered 44.6 percent, a 4.7 percentage point increase when compared to January's reading of 39.9 percent (seasonally adjusted). An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars). The seven industries reporting higher inventories in February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Computer & Electronic Products; Furniture & Related Products; Primary Metals; and Machinery.

Inventories	% Higher	% Same	% Lower	Net	Index
Feb 2007	16	62	22	-6	44.6
Jan 2007	12	57	31	-19	39.9
Dec 2006	20	55	25	-5	48.5
Nov 2006	15	65	20	-5	49.1

Customers' Inventories*

The ISM Customers' Inventories Index registered 53 percent in February, 1 percentage point higher than the 52 percent reported in January. The index indicates that respondents believe their customers have more than sufficient inventories on hand (inventories are too high) at this time. This is the fifth month of growth in this index following 64 consecutive months in which the index registered below 50 percent. Eight industries reported higher customers' inventories during February: Furniture & Related Products; Printing & Related Support Activities; Paper Products; Nonmetallic Mineral Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; and Computer & Electronic Products.

Customers' Inventories	% Reporting	%Too High	%About Right	%Too Low	Net	Index
Feb 2007	74	17	72	11	+6	53.0
Jan 2007	75	19	66	15	+4	52.0
Dec 2006	79	18	65	17	+1	50.5
Nov 2006	72	14	73	13	+1	50.5

Prices*

In February, the ISM Prices Index registered 59 percent, indicating manufacturers are paying higher prices on average when compared to January. While 32 percent of respondents reported paying higher prices and 14 percent reported paying lower prices, 54 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In February, 13 industries reported paying higher prices: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; Machinery; Chemical Products; and Primary Metals.

Prices	% Higher	% Same	% Lower	Net	Index
Feb 2007	32	54	14	+18	59.0
Jan 2007	24	58	18	+6	53.0
Dec 2006	19	57	24	-5	47.5
Nov 2006	23	61	16	+7	53.5

Backlog of Orders*

ISM's Backlog of Orders Index registered 51.5 percent, 8 percentage points higher than the 43.5 percent reported in January. The Index indicates manufacturers' order backlogs are now growing after five consecutive months of contraction. Of the 85 percent of respondents who reported their backlog of orders, 26 percent reported greater backlogs, 23 percent reported smaller backlogs, and 51 percent reported no change from January. The 12 industries reporting an increase in order backlogs in February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Textile Mills; Wood Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Paper Products.

Backlog of Orders	% Reporting	% Greater	% Same	% Less	Net	Index
Feb 2007	85	26	51	23	+3	51.5
Jan 2007	87	17	53	30	-13	43.5
Dec 2006	86	21	48	31	-10	45.0
Nov 2006	86	17	59	24	-7	46.5

New Export Orders*

ISM's New Export Orders Index registered 54 percent in February, an increase of 1.5 percentage points when compared to January's index of 52.5 percent. This is the 51st consecutive month of growth in export orders. The seven industries reporting growth in new export orders in February are: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; and Chemical Products. (Beginning with the January 2007 report, the New Export Orders Index no longer meets the criteria for seasonal adjustment.)

New Export Orders	% Reporting	% Higher	% Same	% Lower	Net	Index
Feb 2007	78	19	70	11	+8	54.0
Jan 2007	79	15	75	10	+5	52.5
Dec 2006	78	16	75	9	+7	54.3
Nov 2006	76	20	74	6	+14	56.9

Imports*

Imports of materials by manufacturers grew during February as the Imports Index registered 61.5 percent. The index is seven percentage points higher when compared to January. This is the 62nd consecutive month of growth in import orders. The 11 industries reporting growth in import activity for February are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Chemical Products.

Imports	% Reporting	% Higher	% Same	% Lower	Net	Index
Feb 2007	78	29	65	6	+23	61.5
Jan 2007	84	18	73	9	+9	54.5
Dec 2006	84	20	71	9	+11	55.5
Nov 2006	83	21	71	8	+13	56.5

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

Buying Policy

Average commitment leadtime for Capital Expenditures increased 7 days to 115 days. Average leadtime for Production Materials decreased 2 days to 48 days. Average leadtime for Maintenance, Repair and Operating (MRO) supplies increased 1 day to 24 days.

Percent Reporting
Capital Expenditures	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Feb 2007	15	11	17	22	25	10	115
Jan 2007	21	10	16	21	22	10	108
Dec 2006	20	10	17	20	23	10	110
Nov 2006	20	10	17	21	21	11	111
Production Materials	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Feb 2007	21	36	29	9	4	1	48
Jan 2007	19	39	26	10	5	1	50
Dec 2006	19	37	27	11	5	1	51
Nov 2006	20	39	29	7	4	1	47
MRO Supplies	Hand- to- Mouth	30 Days	60 Days	90 Days	6 Months	1 Year+	Average Days
Feb 2007	49	34	13	4	0	0	24
Jan 2007	49	36	12	3	0	0	23
Dec 2006	50	33	12	4	1	0	25
Nov 2006	44	39	13	4	0	0	25

About this Report

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

Data and Method of Presentation

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

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

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

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

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

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

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

The next Manufacturing ISM Report On Business® featuring the March 2007 data will be released at 10:00 a.m. (ET) on Monday, April 2, 2007.

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