(Tempe, Arizona) — Economic activity in the manufacturing sector failed to grow in December following 10 consecutive months of expansion, while the overall economy grew for the 74th 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. """"The manufacturing sector failed to grow in December ending 10 consecutive months of growth. The recent trend has been toward slower growth. However, December was apparently a very tough month as New Orders, Production and Employment were all below the break-even mark of 50 percent. Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better. Slower demand appears to be more of a problem than excessive inventories based on the respondents'' comments.""""

TOP PERFORMING INDUSTRIES

The seven industries reporting growth in December — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Primary Metals; and Miscellaneous Manufacturing.

WHAT RESPONDENTS ARE SAYING ...

""""Have received a large volume of price increase notices in the last month with increases between 3 percent to as much as 15 percent."""" (Chemical Products)
""""Business is good, but higher raw material prices are squeezing margins."""" (Primary Metals)
""""The heavy truck industry is not recovering as expected. The latest forecast does not show an increase in orders until Q3 2008."""" (Fabricated Metal Products)
""""General business conditions are slow."""" (Paper Products)
""""Upward price of raw materials, plus low inventories, is pushing price of resins skyward."""" (Plastics & Rubber Products)

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price

Caustic Soda (3); Corn-based Products; Corrugated Containers (4); Diesel Fuel; Fuel Surcharges; Gasoline (2); Methanol (3); Natural Gas (2); Oil (2); Packaging (2); Plastic Products (2); Polypropylene Resin (2); Stainless Steel; Steel; and Sulfuric Acid (2).

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

No commodities are reported in short supply.


DECEMBER 2007 MANUFACTURING INDEX SUMMARIES
PMI

Manufacturing failed to grow in December as the PMI registered 47.7 percent, a decrease of 3.1 percentage points when compared to November''s reading of 50.8 percent. This is the first month that the manufacturing sector has failed to grow since January 2007. 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 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that the overall economy is growing while the manufacturing sector is contracting. """"The past relationship between the PMI and the overall economy indicates that the PMI average for January through December (52.2 percent) corresponds to a 3.2 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for December (47.7 percent) is annualized, it corresponds to a 1.8 percent increase in real GDP annually.""""

New Orders

ISM''s New Orders Index registered 45.7 percent in December. The index is 6.9 percentage points lower than the 52.6 percent reported in November. A New Orders Index above 49.1 percent, over time, is generally consistent with an increase in the Census Bureau''s series on manufacturing orders (in constant 2000 dollars).

Five industries reported increases during December: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Primary Metals.

Production