FOR RELEASE: December 1, 2004

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

PMI at 57.8%

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 November 2004.

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

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in November for the 18th consecutive month, while the overall economy grew for the 37th 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. "November reverses three consecutive months in which the rate of growth had slowed. The manufacturing sector appears poised to end the year on a strong note as the New Orders Index made its way back above the 60 percent mark, and the Employment Index picked up significant momentum. There is still significant upward pressure on prices as commodity price increases are common."

The ISM Prices Index still indicates that there is significant upward pressure on prices. ISM's Customers' Inventories Index indicates that customer inventories are too low at this time. The Backlog of Orders Index indicates that order backlogs decreased in November. The New Export Orders and Imports Indexes continued to grow in November.

Comments from respondents this month focused on inflationary concerns. While many manufacturers are enjoying strong sales, there is concern that commodity prices are eroding profits. Energy leads the list of inflationary drivers as many commodities are derived from oil and gas feedstocks.

ISM's PMI registered 57.8 percent in November, an increase of 1 percentage point when compared to 56.8 percent in October. ISM's New Orders Index rose 3.2 percentage points from 58.3 percent in October to 61.5 percent in November. ISM's Production Index decreased 1.9 percentage points from 58.9 percent in October to 57 percent in November. The ISM Employment Index is at 57.6 percent for November, an increase of 2.8 percentage points when compared to the 54.8 percent reported in October.

ISM's Supplier Deliveries Index registered 56.5 percent, 2.1 percentage points lower than October's 58.6 percent. ISM's Inventories Index registered 50.7 percent in November, up from the 48.2 percent reported in October. ISM's Customers' Inventories Index for November is at 43.5 percent, unchanged from October. ISM's Prices Index in November is 74 percent, 4.5 percentage points lower than the 78.5 percent reported in October.

ISM's Backlog of Orders Index for November declined 1.5 percentage points to 47.5 percent from 49 percent registered in October. ISM's New Export Orders Index registered 54.7 percent, a decrease of 1.9 percentage points from October's 56.6 percent. ISM's Imports Index decreased 0.1 percentage point to 58.4 percent in November, down from 58.5 percent in October.

"It appears the manufacturing sector is definitely sustaining its momentum as this month's PMI strengthened slightly while continuing to indicate a gradual downward trend. Prices are a big issue, but the strength in new orders offsets some of those concerns as companies work to benefit from the volume," said Ore.

In November, 15 industries reported growth: Miscellaneous*; Food; Textiles; Tobacco; Printing & Publishing; Apparel; Transportation & Equipment; Chemicals; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Furniture; Wood & Wood Products; Fabricated Metals; and Rubber & Plastic Products.

"Acetone; Alcohols; Aluminum; Aluminum Products; Benzene; Caustic Soda; Chemicals; Copper; Copper Products; Corrugated Containers; Diesel Fuel; Electricity; Energy; Ethylene; Freight; Fuel; Fuel Surcharges; Gasoline; High Density Polyethylene; Latex; LDPE; Methanol; Motors; Natural Gas (also reported down in price); Nylon; Oil; Oil-Based Products; Packaging; Paper; PET; Petrochemicals; Plastic Products (various forms); Plastics; Polyethylene; Propylene; Propylene Glycol; Resins; Rubber and Rubber-Based Products; Stainless Steel; Steel; Steel Products (various forms); and Transportation are the commodities reported up in price. The commodities reported down in price are Corn and Corn Products; Eggs; Natural Gas (also reported up in price); and Steel. The commodities listed in short supply are Aluminum and Aluminum-Based Products; Benzene; Caustic Soda; Maleic Anhydride; Stainless Steel; Steel; and Steel Products (various forms)," Ore stated.

NOVEMBER 2004 ISM BUSINESS SURVEY AT A GLANCE

	Series Index	Direction Nov vs Oct	Rate of Change Nov vs Oct
PMI	57.8	Growing	Faster
New Orders	61.5	Growing	Faster
Production	57.0	Growing	Slower
Employment	57.6	Growing	Faster
Supplier Deliveries	56.5	Slowing	Slower
Inventories	50.7	Growing	From Contracting
Customers' Inventories	43.5	Too Low	Same
Prices	74.0	Increasing	Slower
Backlog of Orders	47.5	Contracting	Faster
New Export Orders	54.7	Growing	Slower
Imports	58.4	Growing	Slower

THE ECONOMY AT A GLANCE

Overall Economy	Growing	Faster
Manufacturing	Growing	Faster

PMI

The PMI indicates that the manufacturing economy grew in November for the 18th consecutive month. The PMI for November registered 57.8 percent, a 1 percentage point increase when compared to the October reading of 56.8 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 November 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 November (60.7 percent) corresponds to a 6.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for November (57.8 percent) is annualized, this corresponds to a 5.5 percent increase in GDP.

Month	Nov'04	Oct'04	Sep'04	Aug'04	Jul'04
PMI%	57.8	56.8	58.5	59.0	62.0
Month	Jun'04	May'04	Apr'04	Mar'04	Feb'04
PMI%	61.1	62.8	62.4	62.5	61.4
Month	Jan'04	Dec'03	Nov'03	Oct'03	Sep'03
PMI%	63.6	63.4	61.3	57.1	54.7

New Orders

ISM's New Orders Index grew in November with a reading of 61.5 percent. The index is 3.2 percentage points higher than the 58.3 percent registered in October, and it is the 19th 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). Eleven industries reported increases for the month of November: Miscellaneous*; Food; Textiles; Printing & Publishing; Apparel; Furniture; Chemicals; Instruments and Photographic Equipment; Transportation & Equipment; Electronic Components & Equipment; and Industrial & Commercial Equipment & Computers.

New Orders	%Better	%Same	%Worse	Net	Index
November 2004	33	49	18	+15	61.5
October 2004	27	56	17	+10	58.3
September 2004	31	54	15	+16	58.1
August 2004	36	47	17	+19	61.2

Production

ISM's Production Index is 57 percent in November, 1.9 percentage points lower than the 58.9 percent reported in October. November is the 19th consecutive month of growth in the index. 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 November, 12 registered growth: Tobacco; Textiles; Food; Miscellaneous*; Wood & Wood Products; Printing & Publishing; Chemicals; Instruments & Photographic Equipment; Fabricated Metals; Industrial & Commercial Equipment & Computers; Paper; and Transportation & Equipment.

Production	%Better	%Same	%Worse	Net	Index
November 2004	28	56	16	+12	57.0
October 2004	29	56	15	+14	58.9
September 2004	33	57	10	+23	61.6
August 2004	32	51	17	+15	59.5

Employment

ISM's Employment Index grew for the 13th consecutive month, following a 37-month trend of contraction. The index registered 57.6 percent in November compared to 54.8 percent in October, an increase of 2.8 percentage points. 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 10 industries reporting growth in employment during November are: Apparel; Food; Electronic Components & Equipment; Miscellaneous*; Primary Metals; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Printing & Publishing; Rubber & Plastic Products; and Fabricated Metals.

Employment	%Higher	%Same	%Lower	Net	Index
November 2004	20	71	9	+11	57.6
October 2004	20	66	14	+6	54.8
September 2004	26	60	14	+12	58.1
August 2004	24	61	15	+9	55.7

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower for the 35th consecutive month in November. ISM's Supplier Deliveries Index for November registered 56.5 percent, a decrease of 2.1 percentage points compared to October's reading of 58.6 percent. A reading above 50 percent indicates slower deliveries. The 11 industries reporting slower supplier deliveries in November are: Food; Instruments & Photographic Equipment; Textiles; Rubber & Plastic Products; Miscellaneous*; Industrial & Commercial Equipment & Computers; Chemicals; Furniture; Transportation & Equipment; Electronic Components & Equipment; and Primary Metals.

Supplier Deliveries	%Slower	%Same	%Faster	Net	Index
November 2004	17	77	6	+11	56.5
October 2004	24	70	6	+18	58.6
September 2004	23	73	4	+19	59.6
August 2004	31	66	3	+28	63.2

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

Inventories

Manufacturers' inventories increased in November as ISM's Inventories Index registered 50.7 percent, an increase of 2.5 percentage points when compared to October's 48.2 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 constant 1987 dollars). The three industries reporting higher inventories in November are: Food; Wood & Wood Products; and Transportation & Equipment.

Inventories	%Higher	%Same	%Lower	Net	Index
November 2004	18	60	22	-4	50.7
October 2004	17	61	22	-5	48.2
September 2004	20	63	17	+3	51.0
August 2004	23	61	16	+7	51.7

Customers' Inventories**

The November Customers' Inventories Index is at 43.5 percent, the same as reported in October. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 42nd consecutive month that the index has registered below 50 percent. Three industries reported higher customer inventories during November and they are: Furniture; Instruments & Photographic Equipment; and Electronic Components & Equipment.

Customers' Inventories	% Reporting	% Too High	% About Right	% Too Low	Net	Index
November 2004	74	10	67	23	-13	43.5
October 2004	72	10	67	23	-13	43.5
September 2004	71	8	67	25	-17	41.5
August 2004	73	11	69	20	-9	45.5

Prices**

ISM's Prices Index indicates manufacturers continued to pay higher prices in November. This is the 33rd consecutive month the index has registered higher prices. November's index is at 74 percent, 4.5 percentage points lower than October's reading of 78.5 percent. During November, 55 percent of supply executives reported paying higher prices and 7 percent reported paying lower prices, while 38 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. Seventeen industries reported paying higher prices in November: Tobacco; Textiles; Glass, Stone & Aggregate; Miscellaneous*; Chemicals; Printing & Publishing; Transportation & Equipment; Electronic Components & Equipment; Rubber & Plastic Products; Food; Furniture; Paper; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Primary Metals; Wood & Wood Products; and Fabricated Metals.

Prices	%Higher	%Same	%Lower	Net	Index
November 2004	55	38	7	+48	74.0
October 2004	61	35	4	+57	78.5
September 2004	55	42	3	+52	76.0
August 2004	67	29	4	+63	81.5

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 47.5 percent, indicating manufacturers' backlogs in November contracted when compared to October's reading of 49 percent. Of the 87 percent of respondents who reported their backlog of orders, 18 percent reported greater backlogs, 23 percent reported smaller backlogs, and 59 percent reported no change from October. The six industries reporting an increase in order backlogs during the month are: Miscellaneous*; Furniture; Printing & Publishing; Electronic Components & Equipment; Chemicals; and Industrial & Commercial Equipment & Computers.

Backlog of Orders	% Reporting	% Greater	% Same	% Less	Net	Index
November 2004	87	18	59	23	-5	47.5
October 2004	87	20	58	22	-2	49.0
September 2004	89	28	54	18	+10	55.0
August 2004	89	29	52	19	+10	55.0

New Export Orders

ISM's New Export Orders Index for November registered 54.7 percent, a decrease of 1.9 percentage points when compared to October's index of 56.6 percent. This is the 24th consecutive month of growth in export orders. The nine industries reporting growth in new export orders in November are: Rubber & Plastic Products; Industrial & Commercial Equipment & Computers; Furniture; Food; Electronic Components & Equipment; Chemicals; Fabricated Metals; Transportation & Equipment; and Primary Metals.

New Export Orders	% Reporting	% Better	% Same	% Worse	Net	Index
November 2004	77	15	79	6	+9	54.7
October 2004	77	15	80	5	+10	56.6
September 2004	78	12	81	7	+5	51.8
August 2004	76	19	72	9	+10	54.2

Imports

Imports of materials by manufacturers grew during November as the Imports Index registered 58.4 percent. The index decreased 0.1 percentage point when compared to October's index of 58.5 percent, indicating a slightly slower rate of growth. The 11 industries reporting growth in import activity for November are: Furniture; Printing & Publishing; Miscellaneous*; Apparel; Fabricated Metals; Electronic Components & Equipment; Rubber & Plastic Products; Industrial & Commercial Equipment & Computers; Transportation & Equipment; Instruments & Photographic Equipment; and Primary Metals.

Imports	% Reporting	% Higher	% Same	% Lower	Net	Index
November 2004	80	21	74	5	+16	58.4
October 2004	79	21	72	7	+14	58.5
September 2004	79	23	72	5	+18	55.8
August 2004	78	23	71	6	+17	59.2

*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 2 days to 106 days. Average leadtime for Production Materials decreased 2 days to 48 days. Average leadtime for Maintenance, Repair and Operating (MRO) supplies is unchanged at 23 days.

	Percent Reporting
	Hand to Mouth	30 Days	60 Days	90 Days	6 Mos.	1 Year+	Avg. Days
Capital Expenditures
November 2004	24	9	13	19	27	8	106
October 2004	24	11	11	21	25	8	104
September 2004	23	8	15	18	27	9	110
August 2004	26	11	13	21	22	7	96
Production Materials
November 2004	23	39	24	9	3	2	48
October 2004	21	37	26	11	3	2	50
September 2004	24	39	22	11	2	2	47
August 2004	24	39	22	10	4	1	46
MRO Supplies
November 2004	53	34	8	4	1	0	23
October 2004	50	37	11	1	1	0	23
September 2004	58	31	10	0	1	0	20
August 2004	52	36	8	3	1	0	23

In Short Supply

Aluminum and Aluminum Products; Benzene; Caustic Soda — 3rd month; Maleic Anhydride — 2nd month; Stainless Steel — 11th month; Steel — 11th month; and Steel Products (various forms) — 5th month.

Up in Price

Acetone; Alcohols; Aluminum — 13th month; Aluminum Products — 2nd month; Benzene; Caustic Soda — 7th month; Chemicals — 10th month; Copper — 2nd month; Copper Products — 4th month; Corrugated Containers — 10th month; Diesel Fuel — 3rd month; Electricity — 3rd month; Energy — 11th month; Ethylene; Freight — 9th month; Fuel; Fuel Surcharges; Gasoline — 11th month; High Density Polyethylene (HDPE) — 3rd month; Latex — 4th month; LDPE — 2nd month; Methanol; Motors; Natural Gas* — 28th month; Nylon; Oil — 3rd month; Oil-Based Products; Packaging — 6th month; Paper — 9th month; PET — 2nd month; Petrochemicals; Plastic Products (various forms) — 10th month; Plastics — 4th month; Polyethylene — 3rd month; Propylene — 2nd month; Propylene Glycol; Resins — 4th month; Rubber and Rubber-Based Products; Stainless Steel — 3rd month; Steel — 14th month; Steel Products (various forms) — 4th month; and Transportation.

Down in Price

Corn and Corn Products — 4th month; Eggs; Natural Gas*; and Steel.

*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 42.8 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 December 2004 data will be released at 10:00 a.m. (ET) on January 3, 2005.

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