The Semiannual Economic Forecast May 8, 2012 ISM Business Survey Committees

2 Agenda n Bradley J. Holcomb, CPSM, CPSD Manufacturing Semiannual Forecast n Anthony S. Nieves, C.P.M., CFPM Non-Manufacturing Semiannual Forecast n Dr. Ray Perryman, The Perryman Group n Q & A

3 The Report On Business ® n Surveying manufacturing since 1931 – Approximately 350 respondents – 18 NAICS categories – Weighted by contribution to GDP n Non-manufacturing started in June 1998 – Approximately 350 respondents – 18 NAICS categories – Weighted by contribution to GDP

4 Global PMI

5 Manufacturing Semiannual Forecast Current Operating Rate Percent of Normal Capacity April % December % April % Manufacturing

6 Reported for 2011 Production Capacity Change April % December % Predicted for 2012 December % Production Capacity Mfg

7 Predicted 2012 vs Capital Expenditures Capital ExpendituresMfg April % December %

8 Price ChangesMfg April % Purchase Price Changes Reported April 2012 vs. End 2011 Predicted End 2012 vs. End 2011 Price ChangesMfg April %

9 Predicted Employment Change Employment ChangesMfg April % Predicted End 2012 vs. April 2012 Predicted End 2012 vs. End 2011 Employment ChangesMfg December %

10 Business Revenues (nominal) Business RevenuesMfg April % December % Predicted 2012 vs. 2011

11 Manufacturing 1.Apparel, Leather & Allied Products 2.Machinery 3.Primary Metals 4.Petroleum & Coal Products 5.Plastics & Rubber Products Predicted Increase in Business Revenues by Industry 2012 vs. 2011

12 PMI 2002 – April 2012

13 PMI Annual Average Relative to Midpoint of Average: 55.2% 2012 Average (through April): 53.7%

14 Manufacturing PMI April 2012 Index: 54.8%

15 Manufacturing New Orders April 2012 Index: 58.2%

16 Manufacturing Production April 2012 Index: 61.0%

17 Manufacturing Employment April 2012 Index: 57.3%

18 Manufacturing Inventories April 2012 Index: 48.5%

19 Manufacturing Supplier Deliveries and Prices April 2012 Prices Index: 61.0% April 2012 Supplier Deliveries Index: 49.2%

20 Percent of Normal Capacity April % December % April % Non-Manufacturing Non-Manufacturing Semiannual Forecast Current Operating Rate

21 Reported for 2011 Production Capacity Change April % December % Predicted for 2012 December % Production Capacity Non-Mfg

22 Predicted 2012 vs Capital Expenditures Capital ExpendituresNon-Mfg April % December %

23 Price ChangesNon-Mfg April % Purchase Price Changes Reported April 2012 vs. End 2011 Predicted End 2012 vs. End 2011 Price ChangesNon-Mfg April %

24 Predicted Employment Change Employment ChangesNon-Mfg April % Predicted End 2012 vs. April 2012 Predicted End 2012 vs. End 2011 Employment ChangesNon-Mfg December %

25 Business Revenues (nominal) Business RevenuesNon-Mfg April % December % Predicted 2012 vs. 2011

26 Non-Manufacturing 1.Information 2.Mining 3.Finance & Insurance 4.Agriculture, Forestry, Fishing & Hunting 5.Other Services Predicted Increase in Business Revenues by Industry 2012 vs. 2011

27 NMI January 2008-April 2012

28 Comparison of PMI and NMI 2008-April 2012

29 NMI Annual Average Annual Average Relative to Midpoint of Average: 54.5% 2012 Average (through April): 55.9%

30 Non-Manufacturing Business Activity Index Annual Average Relative to Midpoint of Average: 57.3% 2012 Average (through April): 58.9%

31 Non-Manufacturing Business Activity April 2012 Index: 54.6%

32 Non-Manufacturing New Orders April 2012 Index: 53.5%

33 Non-Manufacturing Inventories April 2012 Index: 54.0%

34 Non-Manufacturing Employment April 2012 Index: 54.2%

35 Non-Manufacturing Supplier Deliveries and Prices April 2012 Prices Index: 53.6% April 2012 Supplier Deliveries Index: 51.5%

36 n Operating rate is currently 81.6% of normal capacity. n Production capacity is expected to increase 5.2% in n Capital expenditures are expected to increase 6.2% in n Prices paid increased 1.9% through the end of April n Prices are expected to increase a total of 2.3% for all of 2012, indicating an expected increase in prices of 0.4% for the remainder of the year. Manufacturing Sector Summary

37 n Manufacturing employment is expected to increase 1.4% during the remainder of n Manufacturing revenues are expected to increase 4.5% in n Overall, manufacturing is expected to grow moderately in Manufacturing Sector Summary (continued)

38 n Operating rate is currently 85.2% of normal capacity. n Production capacity is expected to increase 3.3% in n Capital expenditures are expected to increase 3.6% in n Prices paid increased 1.8% through the end of April n Prices are expected to increase an additional 0.8% over the remainder of the year, for a total 2012 increase of 2.6%. Non-Manufacturing Sector Summary

39 n Non-manufacturing employment is expected to increase 1.9% during the balance of n Non-manufacturing revenues are expected to increase 4.8% in n Overall, non-manufacturing is expected to continue growing in Non-Manufacturing Sector Summary (continued)

40 n Dr. Ray Perryman, The Perryman Group