The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. """"Manufacturing expanded in May as the PMI rose to its highest level in the last 12 months. Both the New Orders and Production Indexes indicated growth, continuing a trend that is now in its fourth month. The ISM Inventories Index indicates that manufacturers are now in their 10th month of inventory reduction. A major concern of respondents is the rate of price increases covering a wide variety of commodities.""""

TOP PERFORMING INDUSTRIES

The 12 industries reporting growth in May — listed in order — are: Nonmetallic Mineral Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Petroleum & Coal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Wood Products; Textile Mills; and Electrical Equipment, Appliances & Components.

WHAT RESPONDENTS ARE SAYING ...

""""Pricing in the chemicals market is now being influenced by crude oil price escalation ..."""" (Chemical Products)
""""Customers need detailed explanations to justify increases on raw materials."""" (Fabricated Metal Products)
""""Slower than expected GDP growth in the 1Q causing some ''pull back'' on sales forecast/estimates through the end of 2007."""" (Plastics & Rubber Products)
""""Exports remain above plan with a positive outlook for the balance of ''07."""" (Transportation Equipment)
""""Steady, same as last year at this time."""" (Furniture & Related Products)

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

Aluminum (6); Aluminum Extrusions; Chemicals (2); Copper (3); Copper Based Products (2); Corrugated Containers (3); Flour; Fuel (3); Gasoline (2); Natural Gas (4); Nickel (7); Petroleum; Petroleum Based Products; Plastic Resins; Stainless Steel (5); and Steel (3).

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

No commodities are reported in short supply.

MAY 2007 MANUFACTURING INDEX SUMMARIES
PMI

Manufacturing growth accelerated in May as the PMI registered 55 percent, an increase of 0.3 percentage point when compared to April''s reading of 54.7 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 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the 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 PMI average for January through May (52.4 percent) corresponds to a 3.3 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for May (55 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually.""""

New Orders

ISM''s New Orders Index rose to 59.6 percent in May. The index is 1.1 percentage points higher than the 58.5 percent reported in April. 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). Nine industries reported increases during May: Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Textile Mills; Miscellaneous Manufacturing; Transportation Equipment; and Primary Metals.

Production

ISM''s Production Index registered 58.3 percent in May, which is 1 percentage point higher than the 57.3 percent reported in April. May is the fourth consecutive month of production growth for manufacturers. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board''s Industrial Production figures. Of the industries reporting in May, nine registered growth: Petroleum & Coal Products; Nonmetallic Mineral Products; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing; and Machinery.

Employment

ISM''s Employment Index registered 51.9 percent in May, which is a decrease of 1.2 percentage points when compared to April''s reading of 53.1 percent. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The eight industries reporting growth in employment during May are: Food, Beverage & Tobacco Products; Wood Products; Miscellaneous Manufacturing; Fabricated Metal Products; Chemical Products; Machinery; Computer & Electronic Products; and Transportation Equipment.