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Manufacturing Index: Production, New Orders Grow While Employment, Inventories Decline

Press release from the issuing company

Tempe, Arizona -- July 3, 2003 -- 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.

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