TOP PERFORMING INDUSTRIES

The 12 industries reporting growth in September — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Computer & Electronic Products; Primary Metals; Furniture & Related Products; Nonmetallic Mineral Products; Paper Products; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Plastics & Rubber Products.

WHAT RESPONDENTS ARE SAYING ...

""""Lower energy prices should have a beneficial effect, but none has been seen so far."""" (Chemical Products)
""""Business remains sluggish — new order rate and size of orders is low."""" (Computer & Electronic Products)
""""Business is steady, even working some overtime."""" (Primary Metals)
""""Freight charges remain high even with falling oil prices. Contractors are in short supply."""" (Paper Products)
""""Within the past two weeks, seeing serious downturn in customer orders related to the housing market downturn."""" (Wood Products)

SEPTEMBER 2006 MANUFACTURING INDEX SUMMARIES
PMI

The PMI indicates that the manufacturing economy grew in September for the 40th consecutive month as it registered 52.9%, a decrease of 1.6 %age points when compared to August''s reading of 54.5%. A reading above 50 % indicates that the manufacturing economy is generally expanding; below 50 % indicates that it is generally contracting.

A PMI in excess of 42%, over a period of time, generally indicates an expansion of the overall economy. The September PMI indicates that both the overall economy and the manufacturing sector are growing at a slower rate. """"The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (54.9%) corresponds to a 4.4% increase in real gross domestic product (GDP). In addition, if the PMI for September (52.9%) is annualized, it corresponds to a 3.7% increase in real GDP annually.""""

New Orders

ISM''s New Orders Index registered 54.2% in September. The index is the same as reported in August. September is the 41st consecutive month the index has exceeded 50%. A New Orders Index above 51.1%, over time, is generally consistent with an increase in the Census Bureau''s series on manufacturing orders (in constant 2000 dollars). Eleven industries reported increases during September: Apparel, Leather & Allied Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; Transportation Equipment; Plastics & Rubber Products; and Furniture & Related Products.

Production

ISM''s Production Index registered 56.1% in September, 0.5% age point lower than the 56.6% reported in August. September is the 41st consecutive month of growth in the index. An index above 50%, over time, is generally consistent with an increase in the Federal Reserve Board''s Industrial Production figures. Of the industries reporting in September, 10 registered growth: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Furniture & Related Products; Primary Metals; Computer & Electronic Products; Chemical Products; Food, Beverage & Tobacco Products; Transportation Equipment; Paper Products; and Nonmetallic Mineral Products.

Employment

ISM''s Employment Index registered 49.4% in September, a decrease of 4.6% age points when compared to August''s reading of 54 %. This contraction follows two consecutive months of growth in employment. An Employment Index above 48.9%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The five industries reporting growth in employment during September are: Petroleum & Coal Products; Nonmetallic Mineral Products; Paper Products; Furniture & Related Products; and Miscellaneous Manufacturing.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower for the 39th consecutive month in September. ISM''s Supplier Deliveries Index for September registered 54.1%, a decrease of 0.9% age point when compared to August''s reading of 55%. A reading above 50% indicates slower deliveries. The eight industries reporting slower supplier deliveries in September are: Petroleum & Coal Products; Computer & Electronic Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Plastics & Rubber Products; Machinery; and Chemical Products.

Inventories

Manufacturers'' inventories contracted in September following two consecutive months of growth as ISM''s Inventories Index registered 46.4%, a 3.8% age point decrease when compared to August''s reading of 50.2%. An Inventories Index greater than 42.2%, over time, is generally consistent with expansion in the Bureau of Economic Analysis'' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars). The four industries reporting higher inventories in September are: Primary Metals; Textile Mills; Nonmetallic Mineral Products; and Food, Beverage & Tobacco Products.

Customers'' Inventories

The ISM Customers'' Inventories Index registered 49% in September, which is 3% age points higher than the 46 % reported in August. The index indicates that respondents believe their customers do not have sufficient inventories on hand (inventories are too low) at this time. This is the 64th consecutive month that the index has registered below 50%. Three industries reported higher customers'' inventories during September: Textile Mills; Paper Products; and Food, Beverage & Tobacco Products.

Prices