PMI(R) at 53.5%; June Manufacturing ISM(R) Report On Business(R); New Orders, Production, Employment and Inventories Growing; Supplier Deliveries Faster

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of June 2015.

TEMPE, Ariz., July 1, 2015 /PRNewswire/ — Economic activity in the manufacturing sector expanded in June for the 30th consecutive month, and the overall economy grew for the 73rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM((R)) Report On Business((R)).

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management((R)) (ISM((R))) Manufacturing Business Survey Committee. “The June PMI((R)) registered 53.5 percent, an increase of 0.7 percentage point over the May reading of 52.8 percent. The New Orders Index registered 56 percent, an increase of 0.2 percentage point from the reading of 55.8percent in May. The Production Index registered 54 percent, 0.5 percentage point below the May reading of 54.5 percent. The Employment Index registered 55.5 percent, 3.8 percentage points above the May reading of 51.7 percent, reflecting growing employment levels from May at a faster rate. Inventories of raw materials registered 53 percent, an increase of 1.5 percentage points from the May reading of 51.5 percent. The Prices Index registered 49.5 percent, the same reading as in May, indicating lower raw materials prices for the eighth consecutive month. Comments from the panel indicate mostly stable to improving business conditions, with the notable exception relating to the oil and gas markets. Also noted is the negative effect on egg prices and availability due to the avian flu outbreak.”

Of the 18 manufacturing industries, 11 are reporting growth in June in the following order: Furniture & Related Products; Wood Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Chemical Products; Paper Products; and Computer & Electronic Products. The four industries reporting contraction in June are: Petroleum & Coal Products; Primary Metals; Plastics & Rubber Products; and Machinery.

WHAT RESPONDENTS ARE SAYING …

— “Avian flu is having a huge effect on egg pricing and items manufactured with eggs.” (Food, Beverage & Tobacco Products) — “Automotive industry remains strong and is expected to stay that way through 2015.” (Fabricated Metal Products) — “Business continues to hold in the U.S., [but is] soft in Europe and in decline in Asia.” (Transportation Equipment) — “Manufacturing business has improved slightly.” (Chemical Products) — “Slight improvement in defense spending on future business.” (Computer & Electronic Products) — “Most prices are stable and business is stable.” (Nonmetallic Mineral Products) — “Downturn in oil and gas markets impacting demand.” (Miscellaneous Manufacturing) — “Stable. Extra capacity available if more orders come in.” (Textile Mills) — “A bit slow. Sales down from last year.” (Machinery) — “Business continues to be strong, with housing starts being up in our markets driving cabinet sales.” (Furniture and Related Products)

MANUFACTURING AT A GLANCE JUNE 2015 Index Series Index Series Index Percentage Direction Rate of Change Trend* Jun May Point (Months) Change PMI(R) 53.5 52.8 +0.7 Growing Faster 30 New Orders 56.0 55.8 +0.2 Growing Faster 31 Production 54.0 54.5 -0.5 Growing Slower 34 Employment 55.5 51.7 +3.8 Growing Faster 2 Supplier Deliveries 48.8 50.7 -1.9 Faster From Slowing 1 Inventories 53.0 51.5 +1.5 Growing Faster 2 Customers’ Inventories 48.5 45.5 +3.0 Too Low Slower 7 Prices 49.5 49.5 0.0 Decreasing Same 8 Backlog of Orders 47.0 53.5 -6.5 Contracting From Growing 1 Exports 49.5 50.0 -0.5 Contracting From Unchanged 1 Imports 53.5 55.0 -1.5 Growing Slower 29 OVERALL ECONOMY Growing Faster 73 Manufacturing Sector Growing Faster 30

Manufacturing ISM((R)) Report On Business((R)) data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in PriceAluminum*; Eggs; and HDPE Resin (2).

Commodities Down in PriceAluminum* (7); Corn (2); Natural Gas; Stainless Steel (8); Steel – Cold Rolled; and Steel – Hot Rolled (8).

Commodities in Short SupplyEgg Powder; and Eggs.

Note: The number of consecutive months the commodity is listed is indicated after each item.*Reported as both up and down in price.

JUNE 2015 MANUFACTURING INDEX SUMMARIES

PMI((R))Manufacturing expanded in June as the PMI((R)) registered 53.5 percent, an increase of 0.7 percentage point over the May reading of 52.8 percent, indicating growth in manufacturing for the 30th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI((R)) in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI((R)) indicates growth for the 73rd consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 30th consecutive month. Holcomb stated, “The past relationship between the PMI((R)) and the overall economy indicates that the average PMI((R)) for January through June (52.6 percent) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI((R)) for June (53.5 percent) is annualized, it corresponds to a 3.3 percent increase in real GDP annually.”

THE LAST 12 MONTHS

Month PMI(R) Month PMI(R) —– —– —– —– Jun 2015 53.5 Dec 2014 55.1 ——– —- ——– —- May 2015 52.8 Nov 2014 57.6 ——– —- ——– —- Apr 2015 51.5 Oct 2014 57.9 ——– —- ——– —- Mar 2015 51.5 Sep 2014 56.1 ——– —- ——– —- Feb 2015 52.9 Aug 2014 58.1 ——– —- ——– —- Jan 2015 53.5 Jul 2014 56.4 ——– —- ——– —- Average for 12 months – 54.7 High – 58.1 Low – 51.5 ———-

New OrdersISM((R))’s New Orders Index registered 56 percent in June, an increase of 0.2 percentage point when compared to the May reading of 55.8 percent, indicating growth in new orders for the 31st consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 11 industries reporting growth in new orders in June — listed in order — are: Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Paper Products; Computer & Electronic Products; Transportation Equipment; Chemical Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Machinery. The four industries reporting a decrease in new orders during June are: Primary Metals; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; and Plastics & Rubber Products.

New Orders %Better %Same %Worse Net Index Jun 2015 29 51 20 +9 56.0 May 2015 29 57 14 +15 55.8 Apr 2015 35 48 17 +18 53.5 Mar 2015 27 58 15 +12 51.8

ProductionISM((R))’s Production Index registered 54 percent in June, which is a decrease of 0.5 percentage point when compared to the 54.5 percent reported in May, indicating growth in production for the 34th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The 10 industries reporting growth in production during the month of June — listed in order — are: Furniture & Related Products; Nonmetallic Mineral Products; Paper Products; Miscellaneous Manufacturing; Computer & Electronic Products; Plastics & Rubber Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Primary Metals. The three industries reporting a decrease in production during June are: Petroleum & Coal Products; Machinery; and Food, Beverage & Tobacco Products.

Production %Better %Same %Worse Net Index Jun 2015 24 59 17 +7 54.0 May 2015 27 62 11 +16 54.5 Apr 2015 36 52 12 +24 56.0 Mar 2015 25 64 11 +14 53.8

EmploymentISM((R))’s Employment Index registered 55.5 percent in June, which is an increase of 3.8 percentage points when compared to the 51.7 percent reported in May, indicating growth in employment for the second consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in June, 10 industries reported employment growth in the following order: Textile Mills; Furniture & Related Products; Fabricated Metal Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Paper Products; Chemical Products; and Primary Metals. The three industries reporting a decrease in employment in June are: Apparel, Leather & Allied Products; Machinery; and Petroleum & Coal Products.

Employment %Higher %Same %Lower Net Index Jun 2015 25 62 13 +12 55.5 May 2015 20 68 12 +8 51.7 Apr 2015 16 72 12 +4 48.3 Mar 2015 17 68 15 +2 50.0

Supplier DeliveriesThe delivery performance of suppliers to manufacturing organizations was faster in June as the Supplier Deliveries Index registered 48.8 percent, which is 1.9 percentage points lower than the 50.7 percent reported in May. This is the first month supplier deliveries have been faster than the previous month since October 2012 when the index registered 49.5 percent. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The two industries reporting slower supplier deliveries in June are: Food, Beverage & Tobacco Products; and Fabricated Metal Products. The six industries reporting faster supplier deliveries during June — listed in order — are: Computer & Electronic Products; Miscellaneous Manufacturing; Paper Products; Transportation Equipment; Machinery; and Chemical Products. Ten industries reported no change in supplier deliveries in June compared to May.

Supplier Deliveries %Slower %Same %Faster Net Index Jun 2015 6 85 9 -3 48.8 May 2015 11 80 9 +2 50.7 Apr 2015 12 80 8 +4 50.1 Mar 2015 14 76 10 +4 50.5

Inventories*The Inventories Index registered 53 percent in June, which is 1.5 percentage points higher than the 51.5 percent registered in May, indicating raw materials inventories are growing in June for the second consecutive month. An Inventories Index greater than 42.9 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 10 industries reporting higher inventories in June — listed in order — are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Furniture & Related Products; Food, Beverage & Tobacco Products; Machinery; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; and Primary Metals. The four industries reporting lower inventories in June are: Textile Mills; Nonmetallic Mineral Products; Paper Products; and Plastics & Rubber Products.

Inventories %Higher %Same %Lower Net Index Jun 2015 21 64 15 +6 53.0 May 2015 17 69 14 +3 51.5 Apr 2015 19 61 20 -1 49.5 Mar 2015 15 73 12 +3 51.5

Customers’ Inventories*ISM((R))’s Customers’ Inventories Index registered 48.5 percent in June, an increase of 3 percentage points from May when customers’ inventories registered 45.5 percent. June’s reading indicates that customers’ inventories are considered to be too low, but higher than in May.

The six manufacturing industries reporting customers’ inventories as being too high during the month of June — listed in order — are: Primary Metals; Furniture & Related Products; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. The five industries reporting customers’ inventories as too low during June are: Machinery; Transportation Equipment; Plastics & Rubber Products; Miscellaneous Manufacturing; and Computer & Electronic Products.

Customers’ Inventories % Reporting %Too High %About Right %Too Low Net Index Jun 2015 62 13 71 16 -3 48.5 May 2015 63 13 65 22 -9 45.5 Apr 2015 66 11 66 23 -12 44.0 Mar 2015 60 12 67 21 -9 45.5

Prices*The ISM((R)) Prices Index registered 49.5 percent in June, the same reading as in May, indicating a decrease in raw materials prices for the eighth consecutive month. In June, 14 percent of respondents reported paying higher prices, 15 percent reported paying lower prices, and 71 percent of supply executives reported paying the same prices as in May. A Prices Index above 52.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the five industries reporting paying increased prices for their raw materials in June are: Plastics & Rubber Products; Food, Beverage & Tobacco Products; Paper Products; Miscellaneous Manufacturing; and Machinery. The seven industries reporting paying lower prices during the month of June — listed in order — are: Primary Metals; Electrical Equipment, Appliances & Components; Furniture & Related Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Computer & Electronic Products. Six industries reported no change in prices in June compared to May.

Prices %Higher %Same %Lower Net Index Jun 2015 14 71 15 -1 49.5 May 2015 15 69 16 -1 49.5 Apr 2015 7 67 26 -19 40.5 Mar 2015 10 58 32 -22 39.0

Backlog of Orders*ISM((R))’s Backlog of Orders Index registered 47 percent in June, a decrease of 6.5 percentage points as compared to the May reading of 53.5 percent, indicating contraction in order backlogs following one month of growth in the backlog of orders. Of the 89 percent of respondents who measure their backlog of orders, 21 percent reported greater backlogs, 27 percent reported smaller backlogs, and 52 percent reported no change from May.

The four industries reporting increased order backlogs in June are: Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; and Machinery. The 10 industries reporting a decrease in order backlogs during June — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Paper Products; and Chemical Products.

Backlog of Orders % Reporting %Greater %Same %Less Net Index Jun 2015 89 21 52 27 -6 47.0 May 2015 88 26 55 19 +7 53.5 Apr 2015 85 25 49 26 -1 49.5 Mar 2015 84 18 63 19 -1 49.5

New Export Orders*ISM((R))’s New Export Orders Index registered 49.5 percent in June, indicating that the volume of new export orders decreased slightly relative to May.

The five industries reporting growth in new export orders in June are: Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Fabricated Metal Products. The six industries reporting a decrease in new export orders during June — listed in order — are: Wood Products; Primary Metals; Paper Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. Seven industries reported no change in New Exports Orders in June compared to May.

New Export Orders % Reporting %Higher %Same %Lower Net Index Jun 2015 75 13 73 14 -1 49.5 May 2015 78 11 78 11 0 50.0 Apr 2015 77 17 69 14 +3 51.5 Mar 2015 73 10 75 15 -5 47.5

Imports*ISM((R))’s Imports Index registered 53.5 percent in June, which is 1.5 percentage points lower than the 55 percent reported in May. This month’s reading represents 29 consecutive months of growth in imports.

The eight industries reporting growth in imports during the month of June — listed in order — are: Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Transportation Equipment; Machinery; Chemical Products; and Computer & Electronic Products. The two industries reporting a decrease in imports during June are: Apparel, Leather & Allied Products; and Nonmetallic Mineral Products. Seven industries reported no change in Imports in June compared to May.

Imports % Reporting %Higher %Same %Lower Net Index Jun 2015 79 15 77 8 +7 53.5 May 2015 79 16 78 6 +10 55.0 Apr 2015 77 15 78 7 +8 54.0 Mar 2015 75 17 71 12 +5 52.5

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying PolicyAverage commitment lead time for Capital Expenditures increased 2 days to 135 days. Average lead time for Production Materials increased by 1 day in June to 67 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 5 days to 26 days.

Percent Reporting Capital Expenditures Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year+ Average Days Jun 2015 24 7 9 16 26 18 135 May 2015 26 5 10 20 19 20 133 Apr 2015 26 7 8 16 25 18 132 Mar 2015 27 4 9 18 22 20 136 Production Materials Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year+ Average Days Jun 2015 12 39 21 15 10 3 67 May 2015 15 35 24 13 10 3 66 Apr 2015 15 34 24 15 9 3 66 Mar 2015 15 36 23 16 7 3 63 MRO Supplies Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year+ Average Days Jun 2015 47 36 11 5 1 0 26 May 2015 44 36 13 5 1 1 31 Apr 2015 44 36 14 5 1 0 28 Mar 2015 49 31 15 4 1 0 26

About This ReportThe data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM((R)) makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of PresentationThe Manufacturing ISM((R)) Report On Business((R)) is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI((R)), New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI((R)) is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI((R)) reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI((R)) in excess of 43.1 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.1 percent, it is generally declining. The distance from 50 percent or 43.1 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM((R)) has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM((R)) Report On Business((R)) survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM((R)) receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM((R)) then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM((R)) Report On Business((R)) monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

About Institute for Supply Management(R)Founded in 1915 as the first supply management institute in the world, Institute for Supply Management((R)) (ISM((R))) is committed to advancing the practice of supply chain management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. This year, ISM celebrates 100 years of leading, innovating and guiding the profession through the renowned ISM Report On Business((R)), highly regarded certification programs, and industry-standard training and educational resources. ISM is a not-for-profit organization with global influence, serving supply chain professionals in more than 90 countries. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM((R)) Report On Business((R)) is posted on ISM((R))’s website at www.instituteforsupplymanagement.org on the first business day* of every month after 10:00 a.m. (ET).

The next Manufacturing ISM((R)) Report On Business((R)) featuring the July 2015 data will be released at 10:00 a.m. (ET) on Monday, August 3, 2015.

*Unless the NYSE is closed.

Contact: Kristina Cahill Report On Business(R) Analyst ISM(R), ROB/Research Tempe, Arizona 800/888-6276, Ext. 3015 E-mail: kcahill@instituteforsupplymanagement.org

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