FOR RELEASE: May 1, 2002

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

PMI at 53.9%

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 2002.

New Orders, Production Growing
Supplier Deliveries Slowing
Employment, Inventories Decline
Exports, Imports Growing

(Tempe, Arizona) — Economic activity in the manufacturing sector grew for the third consecutive month in April. The overall economy grew for the sixth 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. "Though the rate has slowed, a third consecutive month of growth in the manufacturing sector is certainly encouraging. The New Orders Index lost some momentum, but it is still strong enough to drive sector growth in the next several months."

ISM's Backlog of Orders Index indicates that order backlogs grew for the third consecutive month. ISM's Supplier Deliveries Index reflects slower deliveries for the fourth consecutive month. Manufacturing employment continued to decline in April as the index remained below the breakeven point (an index of 50 percent) for the 19th consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the second consecutive month. New Export Orders grew in April for the fourth consecutive month. April's Imports Index accelerated slightly registering growth for the fifth consecutive month.

Comments from supply executives varied greatly by industry. Electronic industry respondents continue to see improvement, while Primary Metals appears to be benefiting from the recently imposed tariffs. On the downside, the Fabricated Metals and Industrial Equipment sectors continue to be concerned about paying higher metals prices. Chemicals and Paper are not yet seeing significant recovery as prices continue to slide.

ISM's PMI is 53.9 percent in April, a decrease of 1.7 percentage points from the 55.6 percent reported in March. ISM's New Orders Index declined from 65.3 percent in March to 59 percent in April. ISM's Production Index rose 0.2 percentage point from 57.8 percent in March to 58 percent in April. The ISM Employment Index is at 46.7 percent for April, a decrease of 0.8 percentage point when compared to the 47.5 percent reported in March.

ISM's Supplier Deliveries Index registered 53.7 percent compared to 53.1 percent in March. ISM's Inventories Index is 42.9 percent. ISM's Customer Inventories Index for April is at 40.5 percent, a slight increase when compared to March's 40 percent, indicating less inventory in the supply chain. ISM's Prices Index in April is 60.3 percent, an increase of 8.4 percentage points from March's 51.9 percent. ISM's Backlog of Orders Index declined from 62.5 percent in March to 56 percent in April.

ISM's New Export Orders Index registered 51.9 percent, up 0.9 percentage point from March's 51 percent. Imports of materials by manufacturers grew, as ISM's Imports Index is 55.7 percent for the month, up from March's 53.4 percent.

"The overall picture shows growth in manufacturing activity during April and a good beginning for the second quarter," added Ore. "The PMI indicates a third consecutive month of significant growth. This month the Prices Index continued to make a strong move upward, indicating pricing power in some commodities. Energy is still a concern for many buyers. Textiles, Primary Metals, and Instruments & Photographic Equipment appear very aggressive in hiring at this point."

Of the 20 industries in the manufacturing sector, 18 industries reported growth: Textiles; Glass, Stone & Aggregate; Petroleum; Furniture; Primary Metals; Fabricated Metals; Rubber & Plastic Products; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Transportation & Equipment; Instruments & Photographic Equipment; Wood & Wood Products; Tobacco; Printing & Publishing; Electronic Components & Equipment; Chemicals; Paper; Food; and Industrial & Commercial Equipment & Computers.

"Steel is the only commodity reported in short supply. Commodities reported up in price are: Aluminum, Aluminum Extrusions; Diesel Fuel; Fuel, Galvanized Steel, High Density Polyethylene; Lumber; Natural Gas, Oil, Paper, Plastics, Polyethylene, Resins, Solvents, Steel, and Styrene. The commodities reported down in price are: Caustic Soda, Chemicals; Corrugated Containers, and Paper," Ore stated.

APRIL 2002 ISM BUSINESS SURVEY AT A GLANCE

	Series Index	Direction Apr vs Mar	Rate of Change Apr vs Mar
PMI	53.9	Growing	Slower
New Orders	59.0	Growing	Slower
Production	58.0	Growing	Faster
Employment	46.7	Contracting	Faster
Supplier Deliveries	53.7	Slowing	Faster
Inventories	42.9	Contracting	Slower
Customer Inventories	40.5	Too Low	Slower
Prices	60.3	Increasing	Faster
Backlog of Orders	56.0	Growing	Slower
New Export Orders	51.9	Growing	Faster
Imports	55.7	Growing	Faster

THE ECONOMY AT A GLANCE

Overall Economy	Growing	Slower
Manufacturing	Growing	Slower

PMI

The PMI indicates that the manufacturing economy grew for the third consecutive month during April with an index of 53.9 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. Ore added, "The past relationship between the PMI and the overall economy indicates that the average PMI for the months of January through April (53.5 percent) corresponds to 3.9 percent growth in real gross domestic product (GDP). However, if the PMI for April (53.9 percent) turned out to be the annual average for 2002, it would correspond to a 4.1 percent increase in GDP."

Month	Apr's02	Mar's02	Feb's02	Jan's02	Dec's01
PMI%	53.9	55.6	54.7	49.9	48.1
Month	Nov's01	Oct's01	Sep's01	Aug's01	Jul's01
PMI%	44.7	39.5	46.2	47.9	43.9
Month	Jun's01	May's01	Apr's01	Mar's01	Feb's01
PMI%	44.3	42.3	43.2	43.2	42.0

New Orders

ISM's New Orders Index indicated growth in April for the fifth consecutive month. The index is 59 percent, 6.3 percentage points lower than the 65.3 percent registered in March. A New Orders Index above 50.8 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars). Industries reporting increases for the month of April are: Textiles; Glass, Stone & Aggregate; Furniture; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Petroleum; Instruments & Photographic Equipment; Electronic Components & Equipment; Fabricated Metals; Rubber & Plastic Products; Transportation & Equipment; Primary Metals; Paper; Printing & Publishing; Wood & Wood Products; Chemicals; Industrial & Commercial Equipment & Computers; and Food.

New Orders	%Better	%Same	%Worse	Net	Index
April 2002	44	43	13	+31	59.0
March 2002	49	40	11	+38	65.3
February 2002	39	47	14	+25	62.8
January 2002	26	52	22	+4	55.3

Production

ISM's Production Index is 58 percent in April, 0.2 percentage point higher than 57.8 percent reported in March. This is the fifth consecutive month that the Production Index has been above 50 percent, indicating growth in manufacturing production. An index above 49.5 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the 19 industries reporting, those registering growth in April are: Petroleum; Textiles; Glass, Stone & Aggregate; Furniture; Tobacco; Rubber & Plastic Products; Primary Metals; Fabricated Metals; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Wood & Wood Products; Instruments & Photographic Equipment; Transportation & Equipment; Paper; Electronic Components & Equipment; Industrial & Commercial Equipment & Computers; Printing & Publishing; Food; and Chemicals.

Production	%Better	%Same	%Worse	Net	Index
April 2002	38	49	13	+25	58.0
March 2002	36	52	12	+24	57.8
February 2002	33	54	13	+20	61.2
January 2002	22	54	24	-2	52.0

Employment

ISM's Manufacturing Employment Index remained below 50 percent in April for the 19th consecutive month. The Index registered 46.7 percent in April compared to 47.5 percent in March, a decrease of 0.8 percentage point. An Employment Index above 47.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. Industries reporting growth in employment are: Textiles; Primary Metals; Instruments & Photographic Equipment; Transportation & Equipment; Printing & Publishing; Fabricated Metals; Wood & Wood Products; and Glass, Stone & Aggregate.

Employment	%Higher	%Same	%Lower	Net	Index
April 2002	16	64	20	-4	46.7
March 2002	17	62	21	-4	47.5
February 2002	9	68	23	-14	43.8
January 2002	7	65	28	-21	42.6

Supplier Deliveries

ISM's Supplier Deliveries Index indicates delivery performance is slower (a reading above 50 percent indicates slower deliveries). At 53.7 percent, the index is 0.6 percentage point higher than March's 53.1 percent. The industries reporting slower supplier deliveries in April are: Fabricated Metals; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Glass, Stone & Aggregate; Transportation & Equipment; Primary Metals; Wood & Wood Products; Printing & Publishing; and Electronic Components & Equipment.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
April 2002	10	87	3	+7	53.7
March 2002	10	84	6	+4	53.1
February 2002	9	85	6	+3	52.3
January 2002	6	88	6	0	51.7

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

Inventories

The rate of liquidation of manufacturers's inventories decelerated slightly in April as the Inventories Index registered 42.9 percent, up from the 41.2 percent reported in March. The Inventories Index has been under 50 percent for 27 consecutive months. An Inventories Index greater than 41.3 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis's (BEA) figures on overall manufacturing inventories (in constant 1987 dollars). Four industries reported higher inventories in April: Primary Metals; Transportation & Equipment; Food; and Rubber & Plastic Products.

Inventories	%Higher	%Same	%Lower	Net	Index
April 2002	13	61	26	-13	42.9
March 2002	11	63	26	-15	41.2
February 2002	10	64	26	-16	39.5
January 2002	10	58	32	-22	40.5

Customers's Inventories

The Customers's Inventories Index is at 40.5 percent, up from 40 percent reported in March. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 11th consecutive month that the index has registered below 50. Two industries reported excessive customers's inventories in April: Rubber & Plastics Products and Food.

Customer Inventories	%Reporting	% Too High	% About Right	% Too Low	Net	Index
April 2002	86	8	65	27	-19	40.5
March 2002	87	7	66	27	-20	40.0
February 2002	88	8	67	25	-17	41.5
January 2002	88	10	67	23	-13	43.5

Prices

ISM's Prices Index indicates manufacturers paid higher prices in April. This is the second month the Index has registered higher prices. With the index at 60.3 percent, the index is 8.4 percentage points higher than March's 51.9 percent. In April, 36 percent of supply executives reported paying higher prices and 11 percent reported paying lower prices, while 53 percent reported that prices were unchanged from the preceding month.

A Prices Index below 46.6 percent, over time, is generally consistent with a decrease in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The industries reporting paying higher prices for April are: Petroleum; Rubber & Plastic Products; Instruments & Photographic Equipment; Wood & Wood Products; Tobacco; Fabricated Metals; Primary Metals; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Chemicals; Furniture; Paper; Food; and Glass, Stone & Aggregate.

Prices	%Higher	%Same	%Lower	Net	Index
April 2002	36	53	11	+25	60.3
March 2002	18	66	16	+2	51.9
February 2002	9	65	26	-17	41.5
January 2002	7	69	24	-17	43.9

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 (not seasonally adjusted) registered 56 percent, indicating growth in manufacturers's backlogs, but the rate of growth decelerated as the index fell 6.5 percentage points from March's report of 62.5 percent. Of the 87 percent of respondents who measure their backlog of orders, 27 percent reported greater backlogs, 15 percent reported smaller backlogs, and 58 percent reported no change from March. The industries reporting an increase in order backlog during April are: Apparel; Rubber & Plastic Products; Paper; Furniture; Wood & Wood Products; Fabricated Metals; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Transportation & Equipment; Glass, Stone & Aggregate; Printing & Publishing; and Electronic Components & Equipment.

Backlog of Orders	%Reporting	%Greater	%Same	%Less	Net	Index
April 2002	87	27	58	15	+12	56.0
March 2002	87	35	55	10	+25	62.5
February 2002	88	23	60	17	+6	53.0
January 2002	89	16	57	27	-11	44.5

New Export Orders

ISM's New Export Orders Index for April registered 51.9 percent, an increase of 0.9 percentage point when compared to March's index of 51 percent. The industries reporting growth in new export orders in April are: Textiles; Wood & Wood Products; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Furniture; Printing & Publishing; Fabricated Metals; Chemicals; Transportation & Equipment; and Industrial & Commercial Equipment & Computers.

New Export Orders	%Exporting	%Better	%Same	%Worse	Net	Index
April 2002	77	15	76	9	+6	51.9
March 2002	76	13	77	10	+3	51.0
February 2002	74	11	78	11	0	51.1
January 2002	73	10	79	11	-1	50.8

Imports

Imports of materials by manufacturers grew in April as the Imports Index registered 55.7 percent, a 2.3 percentage points increase when compared to March's report of 53.4 percent. The 11 industries reporting growth in import activity for April are: Tobacco; Fabricated Metals; Glass, Stone & Aggregate; Printing & Publishing; Furniture; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Chemicals; Transportation & Equipment; Electronic Components & Equipment; Industrial & Commercial Equipment & Computers; and Food.

Imports	%Importing	%Higher	%Same	%Lower	Net	Index
April 2002	76	19	75	6	+13	55.7
March 2002	75	15	80	5	+10	53.4
February 2002	75	10	81	9	+1	52.0
January 2002	75	9	81	10	-1	52.1

Buying Policy

Average commitment leadtime for Capital Expenditures declined 4 days to 91 days. Average leadtime for Production Materials rose 4 days to 50 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies declined 2 days to 20 days.

Percent Reporting
	Hand to Mouth	30 Days	60 Days	90 Days	6 Mos.	1 Year+	Avg. Days
Capital Expenditures
April 2002	23	12	14	25	21	5	91
March 2002	24	6	18	24	23	5	95
February 2002	25	8	16	21	23	7	99
January 2002	27	6	20	20	21	6	93
Production Materials
April 2002	18	46	19	11	4	2	50
March 2002	22	48	17	7	4	2	46
February 2002	25	47	17	7	2	2	43
January 2002	21	48	16	10	4	1	45
MRO Supplies
April 2002	56	34	8	2	0	0	20
March 2002	55	33	8	3	1	0	22
February 2002	53	35	10	2	0	0	21
January 2002	54	37	8	1	0	0	20

In Short Supply

Steel — 2nd month.

Up in Price

Aluminum — 3rd month; Aluminum Extrusions; Diesel Fuel; Fuel — 2nd month; Galvanized Steel; High Density Polyethylene; Lumber; Natural Gas — 2nd month; Oil; Paper; Plastics; Polyethylene; Resins; Solvents; Steel — 3rd month; Styrene.

Down in Price

Caustic Soda — 12th month; Chemicals; Corrugated Containers — 15th month; Paper.

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.

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's 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 intrayear variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to nonmoveable 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 42.7 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 world's leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. In June 2001 the membership of NAPM voted to change the association's name from the National Association of Purchasing Management to the Institute for Supply Management™ to reflect the increasing strategic and global significance of supply management. For further information, see the ISM Web site at www.ism.ws. 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 May 2002 data will be released at 10:00 a.m. (ET) on June 3, 2002.

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