1. ISM Business Surveys Economic Growth in 2006 Presented by Norbert Ore, C.P.M. February 23, 2006

2. The Reports on Business Surveying manufacturing since 1931 Over 350 respondents 20 SIC Codes Weighted by contribution to GDP 70% response rate Nonmanufacturing started in June 1997

3. The Reports on Business A series of diffusion indexes measuring change from month to month Above 50% indicates growth Below 50% indicates contraction 50% is the breakeven or “no change”

4. Basic Economics The Rate of UP is DOWN 50 % The Rate of DOWN is UP 50 %

5. Composition of GDP

6. Composition of Consumer Spending (PCE*) * Personal Consumption Expenditures

7. http://www.ism.ws/ISMReport/JPMorgan

8. http://www.chinawuliu.com.cn/english/index.asp

10. 2004 – AVG 60.3 2005 – AVG 55.5

24. Macroeconomic Indicators – Supply Chains Exchange Rates Important currencies to monitor include the Euro, the Japanese yen, the Canadian dollar and the British pound sterling. A strong U.S. dollar in relationship to these currencies means less expensive foreign purchases, but a greater impact on foreign sales. PPI-CPI The Producer Index can act as an early warning indicator of inflation, as price changes occur here first before being passed on to the consumer. Unemployment This measurement should be used in comparison to historical levels for the relevant industry or geographic region in order to best understand if the market is growing or shrinking. Interest Rates The Federal Reserve Board (FRB) sets the interest rate for the money banks loan to each other. To spur economic growth, the FRB encourages lending by lowering rates to make money “cheaper”. Rates are increased to halt inflation. These changes therefore indicate if the economy is expanding or contracting. ISM’s PMI Index This composite index is based on seasonally adjusted diffusion indices for new orders, production, supplier deliveries, inventories, and employment. An index percentage above 50 percent generally means the economy is expanding, while anything below 50 percent indicates contraction. Source: Cavinato, Joseph L. and Ralph G. Kauffman. “The Purchasing Handbook” ISM (2000). Revised.

25. GDP growth 72% Payroll jobs up 32.1 million (31 percent) Two brief recessions ‘90-’91, ’01 (total 16 months) Business productivity up 50 percent Interest rates: 10 year Treasury 8.39% 4.5 % 30 year mortgage 9.31% 6.1% Dow Jones industrial average 2,680 / 10,919 Greenspan’s Legacy 1987-2005

26. Environmental Factors Business is investing Employment is accelerating Capacity in primary manufacturing Fed almost finished Exchange rates favorable to export