FOR RELEASE: July 1, 2003

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

PMI at 49.8%

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 June 2003.

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

(Tempe, Arizona) — Economic activity in the manufacturing sector failed to grow in June, while the overall economy grew for the 20th 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. "While the overall economy appears to be in a recovery, the manufacturing sector failed to grow in June. However, the improved showing of the New Orders, Production, and New Export Orders Indexes is encouraging as it appears that manufacturing is positioned for a recovery in the second half."

ISM's Backlog of Orders Index indicates that order backlogs were unchanged in June. Manufacturing Employment continued to decline in June as the index remained below the breakeven point (an index of 50 percent) for the 33rd consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 16th consecutive month. New Export Orders grew in June for the 18th consecutive month. June's Imports Index grew for the eighth consecutive month.

Comments from purchasing and supply managers are still mixed. Companies' capital equipment purchases appear to be lagging, while the metal fabricators see signs of improvement. Strength in the housing sector was mentioned by a number of respondents. The major concern for manufacturers this month is the cost of natural gas.

ISM's PMI is 49.8 percent in June, an increase of 0.4 percentage point when compared to 49.4 in May. ISM's New Orders Index rose 0.3 percentage point from 51.9 percent in May to 52.2 percent in June. ISM's Production Index rose 1.4 percentage points from 51.5 percent in May to 52.9 percent in June. The ISM Employment Index is at 46.2 percent for June, an increase of 3.2 percentage points when compared to the 43 percent reported in May.

ISM's Supplier Deliveries Index registered 50 percent, 1.3 percentage points lower than May's 51.3 percent. ISM's Inventories Index declined to 41.3 percent in June from the 46.1 percent reported in May. ISM's Customers' Inventories Index for June is at 45.5 percent, a slight increase of 0.5 percentage point compared to the May reading of 45 percent. ISM's Prices Index in June is 56.5 percent, an increase of 5 percentage points from May's 51.5 percent.

ISM's Backlog of Orders Index decreased 1 percentage point, registering 50 percent in June compared to 51 percent in May. ISM's New Export Orders Index registered 54.4 percent, up 3.6 percentage points from May's 50.8 percent, while ISM's Imports Index rose 4.2 percentage points to 56.4 percent in June from 52.2 percent in May.

"The mood of the survey respondents has definitely turned upbeat, and is evidenced by the fact that nine industries reported growth this month. Although the Prices paid indicator is higher, there is a short list of commodities reported up in price. Last month we saw a positive reversal of a number of indexes, and this month we see further strengthening of those indexes. This is certainly encouraging for the second half of the year," said Ore.

Of the 20 industries in the manufacturing sector, nine industries reported growth: Leather; Instruments & Photographic Equipment; Electronic Components & Equipment; Fabricated Metals; Food; Paper; Chemicals; Transportation & Equipment; and Miscellaneous*.

"There are no commodities reported in short supply. Commodities reported up in price are: Aluminum; Caustic Soda; Electricity; Energy; Natural Gas; Nickel; Paper; Plastic; and Stainless Steel. The commodities reported down in price are Corrugated Cartons; Gasoline; Machined Components; Natural Gas; Oil; Polypropylene; Resins; and Steel," Ore stated.

JUNE 2003 ISM BUSINESS SURVEY AT A GLANCE

	Series Index	Direction Jun vs May	Rate of Change Jun vs May
PMI	49.8	Contracting	Slower
New Orders	52.2	Growing	Faster
Production	52.9	Growing	Faster
Employment	46.2	Contracting	Slower
Supplier Deliveries	50.0	Unchanged	From Slower
Inventories	41.3	Contracting	Faster
Customers' Inventories	45.5	Too Low	Slower
Prices	56.5	Increasing	Faster
Backlog of Orders	50.0	Unchanged	From Growing
New Export Orders	54.4	Growing	Faster
Imports	56.4	Growing	Faster

THE ECONOMY AT A GLANCE

Overall Economy	Growing	Faster
Manufacturing	Contracting	Slower

PMI

The PMI indicates that the manufacturing economy declined in June for the fourth consecutive month. The PMI for June registered 49.8 percent, an increase of 0.4 percentage point compared to the May reading of 49.4 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 42.9 percent, over a period of time, generally indicates an expansion of the overall economy. The June PMI indicates that the overall economy is growing and the manufacturing sector is declining. The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (49.2 percent) corresponds to a 2.3 percent increase in real gross domestic product (GDP). However, if the PMI for June (49.8 percent) turned out to be the annual average for 2003, this would correspond to a 2.5 percent increase in GDP.

Month	Jun'03	May'03	Apr'03	Mar'03	Feb'03
PMI%	49.8	49.4	45.4	46.2	50.5
Month	Jan'03	Dec'02	Nov'02	Oct'02	Sep'02
PMI%	53.9	55.2	50.5	49.7	50.7
Month	Aug'02	Jul'02	Jun'02	May'02	Apr'02
PMI%	50.3	50.7	55.2	54.7	53.3

New Orders

ISM's New Orders Index grew in June with a reading of 52.2 percent. The index is 0.3 percentage point higher than the 51.9 percent registered in May, and the second 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). Industries reporting increases for the month of June are: Leather; Instruments & Photographic Equipment; Electronic Components & Equipment; Fabricated Metals; Chemicals; Paper; Rubber & Plastic Products; Food; Industrial & Commercial Equipment & Computers; Printing & Publishing; Transportation & Equipment; and Miscellaneous*.

New Orders	%Better	%Same	%Worse	Net	Index
June 2003	25	60	15	+10	52.2
May 2003	29	54	17	+12	51.9
April 2003	22	58	20	+2	45.2
March 2003	26	49	25	+1	46.2

Production

ISM's Production Index is 52.9 percent in June, 1.4 percentage points higher than the 51.5 percent reported in May, and the second 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 June, the following registered growth: Leather; Instruments & Photographic Equipment; Paper; Fabricated Metals; Electronic Components & Equipment; Miscellaneous*; Food; Glass, Stone, & Aggregate; Chemicals; Printing & Publishing; Transportation & Equipment; and Industrial & Commercial Equipment & Computers.

Production	%Better	%Same	%Worse	Net	Index
June 2003	25	60	15	+10	52.9
May 2003	25	60	15	+10	51.5
April 2003	20	63	17	+3	47.0
March 2003	22	56	22	0	46.3

Employment

ISM's Manufacturing Employment Index remained below 50 percent in June for the 33rd consecutive month. The index registered 46.2 percent in June compared to 43 percent in May, an increase of 3.2 percentage points. An Employment Index above 47.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The industries reporting growth in Employment during June are: Transportation & Equipment; Instruments & Photographic Equipment; Food; Miscellaneous*; Fabricated Metals; and Wood & Wood Products.

Employment	%Higher	%Same	%Lower	Net	Index
June 2003	15	67	18	-3	46.2
May 2003	13	65	22	-9	43.0
April 2003	9	68	23	-14	41.4
March 2003	9	69	22	-13	42.1

Supplier Deliveries

ISM's Supplier Deliveries Index indicates delivery performance is unchanged when comparing June to May with a reading of 50 percent. This is a decrease of 1.3 percentage points when compared to May's reading of 51.3 percent. A reading above 50 percent indicates slower deliveries. The eight industries reporting slower Supplier Deliveries in June are: Textiles; Glass, Stone, & Aggregate; Wood & Wood Products; Electronic Components & Equipment; Instruments & Photographic Equipment; Food; Chemicals; and Transportation & Equipment.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
June 2003	6	89	5	+1	50.0
May 2003	8	87	5	+3	51.3
April 2003	7	86	7	0	50.0
March 2003	10	86	4	+6	53.8

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

Inventories

The rate of liquidation of manufacturers' inventories accelerated in June as the Inventories Index registered 41.3 percent. This compares to 46.1 percent reported in May. The Inventories Index has been under 50 percent for 41 consecutive months. An Inventories Index greater than 42.1 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 only industries reporting higher Inventories in June are: Textiles and Food.

Inventories	%Higher	%Same	%Lower	Net	Index
June 2003	12	60	28	-16	41.3
May 2003	14	65	21	-7	46.1
April 2003	14	59	27	-13	42.7
March 2003	15	57	28	-13	42.3

Customers' Inventories

The Customers' Inventories Index is at 45.5 percent, an increase of 0.5 percentage point compared to the May reading of 45 percent. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 25th consecutive month that the index has registered below 50 percent. Glass, Stone, & Aggregate; Paper; Chemicals; and Rubber & Plastic Products are the industries reporting excessive customers' inventories during June.

Customers' Inventories	%Reporting	% Too High	% About Right	% Too Low	Net	Index
June 2003	79	12	67	21	-9	45.5
May 2003	78	10	70	20	-10	45.0
April 2003	75	10	69	21	-11	44.5
March 2003	72	12	60	28	-16	42.0

Prices

ISM's Prices Index (not seasonally adjusted effective January 2003) indicates manufacturers continued to pay higher prices in June. This is the 16th consecutive month the index has registered higher prices. With the index at 56.5 percent, the index is 5 percentage points higher than May's reading of 51.5 percent. In June, 26 percent of supply executives reported paying higher prices and 13 percent reported paying lower prices, while 61 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 industries reporting paying higher prices for June are: Tobacco; Leather; Textiles; Rubber & Plastic Products; Glass, Stone, & Aggregate; Primary Metals; Chemicals; Food; Transportation & Equipment; Wood & Wood Products; Furniture; Paper; Fabricated Metals; Industrial & Commercial Equipment & Computers; Miscellaneous*; and Electronic Components & Equipment.

Prices	%Higher	%Same	%Lower	Net	Index
June 2003	26	61	13	+13	56.5
May 2003	21	61	18	+3	51.5
April 2003	37	53	10	+27	63.5
March 2003	47	46	7	+40	70.0

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 (not seasonally adjusted) registered 50 percent, indicating manufacturers' backlogs in June are unchanged when compared to May. Of the 84 percent of respondents who report their Backlog of Orders, 18 percent reported greater backlogs, 18 percent reported smaller backlogs, and 64 percent reported no change from May. The industries reporting an increase in order backlogs during the month are: Instruments & Photographic Equipment; Printing & Publishing; Paper; Glass, Stone, & Aggregate; Furniture; Miscellaneous*; Chemicals; Electronic Components & Equipment; Industrial & Commercial Equipment & Computers; and Rubber & Plastic Products.

Backlog of Orders	%Reporting	%Greater	%Same	%Less	Net	Index
June 2003	84	18	64	18	0	50.0
May 2003	86	21	60	19	+2	51.0
April 2003	87	17	61	22	-5	47.5
March 2003	87	15	53	32	-17	41.5

New Export Orders

ISM's New Export Orders Index for June registered 54.4 percent, an increase of 3.6 percentage points when compared to May's index of 50.8 percent. This is the 18th consecutive month of growth in Export orders. The industries reporting growth in New Export Orders in June are: Instruments & Photographic Equipment; Food; Paper; Electronic Components & Equipment; Primary Metals; Chemicals; Printing & Publishing; Rubber & Plastic Products; Miscellaneous*; Transportation & Equipment; and Industrial & Commercial Equipment & Computers.

New Export Orders	%Reporting	%Better	%Same	%Worse	Net	Index
June 2003	77	18	77	5	+13	54.4
May 2003	75	16	72	12	+4	50.8
April 2003	75	13	78	9	+4	51.1
March 2003	75	13	79	8	+5	52.0

Imports

Imports of materials by manufacturers grew during June as the Imports Index registered 56.4 percent. The index rose 4.2 percentage points when compared to May's index of 52.2 percent. The 14 industries reporting growth in Import activity for June are: Tobacco; Furniture; Textiles; Instruments & Photographic Equipment; Paper; Electronic Components & Equipment; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Printing & Publishing; Chemicals; Miscellaneous*; Food; Fabricated Metals; and Rubber & Plastic Products.

Imports	%Reporting	%Higher	%Same	%Lower	Net	Index
June 2003	80	21	73	6	+15	56.4
May 2003	79	16	75	9	+7	52.2
April 2003	78	18	76	6	+12	54.5
March 2003	79	16	76	8	+8	52.5

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

Buying Policy

Average commitment leadtime for Capital Expenditures decreased three days to 101 days. Average leadtime for Production Materials decreased one day to 45 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies increased one day to 22 days.

Percent Reporting
	Hand to Mouth	30 Days	60 Days	90 Days	6 Mos.	1 Year+	Avg. Days
Capital Expenditures
June 2003	25	12	10	24	20	9	101
May 2003	23	9	15	23	21	9	104
April 2003	25	8	13	20	28	6	101
March 2003	25	9	14	22	24	6	97
Production Materials
June 2003	23	44	19	9	4	1	45
May 2003	21	45	20	8	5	1	46
April 2003	23	44	18	10	4	1	45
March 2003	19	45	21	8	5	2	50
MRO Supplies
June 2003	55	33	8	3	1	0	22
May 2003	54	36	8	1	1	0	21
April 2003	57	32	7	4	0	0	20
March 2003	56	33	8	1	2	0	22

In Short Supply

No commodities are reported in short supply.

Up in Price

Aluminum; Caustic Soda — 13th month; Electricity; Energy; Natural Gas* — 11th month; Nickel; Paper; Plastic; and Stainless Steel.

Down in Price

Corrugated Cartons — 4th month; Gasoline — 2nd month; Machined Components; Natural Gas* — 3rd month; Oil — 3rd month; Polypropylene; Resins; and Steel — 3rd month.

*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 July 2003 data will be released at 10:00 a.m. (ET) on August 1, 2003.

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