TOP PERFORMING INDUSTRIES

The nine industries reporting growth in December — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Plastics & Rubber Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Primary Metals; Chemical Products; and Food, Beverage & Tobacco Products.

WHAT RESPONDENTS ARE SAYING ...

""""Strong demand for 4Q shipments."""" (Computer & Electronic Products)
""""Demand is slowing."""" (Chemical Products)
""""Automotive customer demand is picking up after being flat/down the last couple months."""" (Fabricated Metal Products)
""""Business climate remains strong due to heavy truck build."""" (Transportation Equipment)
""""We are projecting a 10 percent drop in production through the first half of next year."""" (Furniture & Related Products)


DECEMBER 2006 MANUFACTURING INDEX SUMMARIES
PMI

The manufacturing economy returned to growth in December as the PMI registered 51.4%, an increase of 1.9 percentage points when compared to November''s reading of 49.5%. 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. Therefore, the December 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 December (53.9%) corresponds to a 4.1% increase in real gross domestic product (GDP). In addition, if the PMI for December (51.4%) is annualized, it corresponds to a 3.2% increase in real GDP annually.""""

New Orders

ISM''s New Orders Index registered 52.1 percent in December. The index is 3.4 percentage points higher than the 48.7 percent reported in November. Manufacturers'' orders are once again growing after a one-month decline in November. A New Orders Index above 51.1 percent, over time, is generally consistent with an increase in the Census Bureau''s series on manufacturing orders (in constant 2000 dollars). Ten industries reported increases during December: Apparel, Leather & Allied Products; Petroleum & Coal Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Plastics & Rubber Products; Computer & Electronic Products; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; and Machinery.

Production

ISM''s Production Index registered 51.8% in December, 3.3 percentage points higher than the 48.5 percent reported in November. Manufacturers'' production is once again growing after a one-month decline in November. 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 December, six registered growth: Apparel, Leather & Allied Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Chemical Products; and Computer & Electronic Products.

Employment

ISM''s Employment Index registered 49.7% in December, an increase of 0.5 percentage point when compared to November''s reading of 49.2%. This is the second consecutive month that manufacturing employment has contracted. An Employment Index above 48.9 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The seven industries reporting growth in employment during December are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower for the 42nd consecutive month in December. ISM''s Supplier Deliveries Index for December registered 53.4%, an increase of 0.6 percentage point when compared to November''s reading of 52.8%. A reading above 50% indicates slower deliveries. The four industries reporting slower supplier deliveries in December are: Computer & Electronic Products; Primary Metals; Transportation Equipment; and Machinery.

Inventories

Manufacturers'' inventories contracted at a faster rate in December as ISM''s Inventories Index registered 48.4%, a 1.3 percentage point decrease when compared to November''s reading of 49.7%. An Inventories Index greater than 42.2 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis'' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars). The six industries reporting higher inventories in December are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.

Customers'' Inventories

The ISM Customers'' Inventories Index registered 50.5% in December, the same as reported in November. The index indicates that respondents believe their customers have more than sufficient inventories on hand (inventories are too high) at this time. This is the third month of growth in this index following 64 consecutive months in which the index registered below 50 percent. Seven industries reported higher customers'' inventories during December: Electrical Equipment, Appliances & Components; Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Paper Products; Fabricated Metal Products; and Machinery.