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

2. 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. 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. 4 Global PMI

5. 5 Manufacturing Semiannual Forecast Current Operating Rate Percent of Normal Capacity April 201281.6% December 201179.2% April 2011 83.2 % Manufacturing

6. 6 Reported for 2011 Production Capacity Change April 2012 + 5.2% December 2011+ 5.6% Predicted for 2012 December 2011 +4.6% Production Capacity Mfg

7. 7 Predicted 2012 vs. 2011 Capital Expenditures Capital ExpendituresMfg April 2012+6.2% December 2011 + 1.9%

8. 8 Price ChangesMfg April 2012+ 1.9% Purchase Price Changes Reported April 2012 vs. End 2011 Predicted End 2012 vs. End 2011 Price ChangesMfg April 2012+ 2.3%

9. 9 Predicted Employment Change Employment ChangesMfg April 2012+ 1.4% Predicted End 2012 vs. April 2012 Predicted End 2012 vs. End 2011 Employment ChangesMfg December 2011+ 1.3%

10. 10 Business Revenues (nominal) Business RevenuesMfg April 2012+ 4.5% December 2011+ 5.5% Predicted 2012 vs. 2011

11. 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. 12 PMI 2002 – April 2012

13. 13 PMI Annual Average Relative to Midpoint of 50 2011 Average: 55.2% 2012 Average (through April): 53.7%

14. 14 Manufacturing PMI April 2012 Index: 54.8%

15. 15 Manufacturing New Orders April 2012 Index: 58.2%

16. 16 Manufacturing Production April 2012 Index: 61.0%

17. 17 Manufacturing Employment April 2012 Index: 57.3%

18. 18 Manufacturing Inventories April 2012 Index: 48.5%

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

20. 20 Percent of Normal Capacity April 201285.2% December 201185.2% April 2011 83.7% Non-Manufacturing Non-Manufacturing Semiannual Forecast Current Operating Rate

21. 21 Reported for 2011 Production Capacity Change April 2012+ 3.3% December 2011+ 3.2% Predicted for 2012 December 2011 + 1.1% Production Capacity Non-Mfg

22. 22 Predicted 2012 vs. 2011 Capital Expenditures Capital ExpendituresNon-Mfg April 2012 + 3.6% December 2011 + 0.1%

23. 23 Price ChangesNon-Mfg April 2012 + 1.8% Purchase Price Changes Reported April 2012 vs. End 2011 Predicted End 2012 vs. End 2011 Price ChangesNon-Mfg April 2012+ 2.6%

24. 24 Predicted Employment Change Employment ChangesNon-Mfg April 2012+ 1.9% Predicted End 2012 vs. April 2012 Predicted End 2012 vs. End 2011 Employment ChangesNon-Mfg December 2011+ 1.1%

25. 25 Business Revenues (nominal) Business RevenuesNon-Mfg April 2012+ 4.8% December 2011+ 3.1% Predicted 2012 vs. 2011

26. 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. 27 NMI January 2008-April 2012

28. 28 Comparison of PMI and NMI 2008-April 2012

29. 29 NMI Annual Average Annual Average Relative to Midpoint of 50 2011 Average: 54.5% 2012 Average (through April): 55.9%

30. 30 Non-Manufacturing Business Activity Index Annual Average Relative to Midpoint of 50 2011 Average: 57.3% 2012 Average (through April): 58.9%

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

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

33. 33 Non-Manufacturing Inventories April 2012 Index: 54.0%

34. 34 Non-Manufacturing Employment April 2012 Index: 54.2%

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

36. 36 n Operating rate is currently 81.6% of normal capacity. n Production capacity is expected to increase 5.2% in 2012. n Capital expenditures are expected to increase 6.2% in 2012. n Prices paid increased 1.9% through the end of April 2012. 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. 37 n Manufacturing employment is expected to increase 1.4% during the remainder of 2012. n Manufacturing revenues are expected to increase 4.5% in 2012. n Overall, manufacturing is expected to grow moderately in 2012. Manufacturing Sector Summary (continued)

38. 38 n Operating rate is currently 85.2% of normal capacity. n Production capacity is expected to increase 3.3% in 2012. n Capital expenditures are expected to increase 3.6% in 2012. n Prices paid increased 1.8% through the end of April 2012. 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. 39 n Non-manufacturing employment is expected to increase 1.9% during the balance of 2012. n Non-manufacturing revenues are expected to increase 4.8% in 2012. n Overall, non-manufacturing is expected to continue growing in 2012. Non-Manufacturing Sector Summary (continued)

40. 40 n Dr. Ray Perryman, The Perryman Group