1. The Semiannual Economic Forecast April 30, 2013 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 Bernard Baumohl, The Economic Outlook Group n Q & A

3. 3 Dr. John H. Hoagland (December 22, 1919 – March 6, 2013) n BA from Oberlin College, MBA from Harvard University, PhD from the Ohio State University n Purchasing Professor at Michigan State University’s Broad College of Business from 1952 through his retirement in 1990 n Co-founder of the Purchasing and Supply Management Executive Seminar at MSU n Awarded an NAPM Professorship n ISM J. Shipman Gold Medal Award recipient

4. 4 Dr. John H. Hoagland (December 22, 1919 – March 6, 2013) n Paul Harris Fellow from Rotary International n Robert Angell Award honoree from NAPM of Central Michigan n Honorary Alumni Award winner from MSU Alumni Association n Hoagland-Metzler Endowed Chair in Purchasing and Supply Management at MSU n ISM John H. Hoagland Award for Distinguished Service by Academics & Practitioners created to honor Dr. Hoagland

5. 5 Dr. John H. Hoagland (December 22, 1919 – March 6, 2013) n Passionately championed the advancement and recognition of the ISM Report On Business ® and the PMI

6. 6 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

7. 7 Manufacturing Semiannual Forecast Current Operating Rate Percent of Normal Capacity April 201380.2% December 201277.5% April 2012 81.6 % Manufacturing

8. 8 Reported for 2012 Production Capacity Change April 2013 + 6.7% December 2012+ 6.8% Predicted for 2013 December 2012 + 1.3% Production Capacity Mfg

9. 9 Predicted 2013 vs. 2012 Capital Expenditures Capital ExpendituresMfg April 2013+ 9.1% December 2012 + 7.6%

10. 10 Price ChangesMfg April 2013+ 1.4% Purchase Price Changes Reported April 2013 vs. End 2012 Predicted End 2013 vs. End 2012 Price Changes Mfg April 2013 + 2.3%

11. 11 Predicted Employment Change Employment ChangesMfg April 2013+ 0.9% Predicted End 2013 vs. April 2013 Predicted End 2013 vs. End 2012 Employment ChangesMfg December 2012+ 0.8%

12. 12 Business Revenues (nominal) Business RevenuesMfg April 2013+ 4.8% December 2012+ 4.6% Predicted 2013 vs. 2012

13. 13 Manufacturing 1.Wood Products 2.Furniture & Related Products 3.Nonmetallic Mineral Products 4.Petroleum & Coal Products 5.Electrical Equipment, Appliances & Components Predicted Increase in Business Revenues by Industry 2013 vs. 2012

14. 14 PMI 2005 – March 2013

15. 15 PMI Annual Average Relative to Midpoint of 50 2012 Average: 51.7% 2013 Average (through March): 52.9%

16. 16 Percent of Normal Capacity April 201384.7% December 201285.4% April 2012 85.2% Non-Manufacturing Non-Manufacturing Semiannual Forecast Current Operating Rate

17. 17 Reported for 2012 Production Capacity Change April 2013+ 2.3% December 2012+ 3.4% Predicted for 2013 December 2012 + 3.2% Production Capacity Non-Mfg

18. 18 Predicted 2013 vs. 2012 Capital Expenditures Capital ExpendituresNon-Mfg April 2013 + 3.6% December 2012 + 7.0%

19. 19 Price ChangesNon-Mfg April 2013 + 1.9% Purchase Price Changes Reported April 2013 vs. End 2012 Predicted End 2013 vs. End 2012 Price ChangesNon-Mfg April 2013+ 2.4%

20. 20 Predicted Employment Change Employment Changes Non-Mfg April 2013 + 1.3% Predicted End 2013 vs. April 2013 Predicted End 2013 vs. End 2012 Employment ChangesNon-Mfg December 2012+ 1.3%

21. 21 Business Revenues (nominal) Business RevenuesNon-Mfg April 2013+ 3.5% December 2012+ 4.3% Predicted 2013 vs. 2012

22. 22 Non-Manufacturing 1.Construction 2.Transportation & Warehousing 3.Retail Trade 4.Professional, Scientific & Technical Services 5.Other Services Predicted Increase in Business Revenues by Industry 2013 vs. 2012

23. 23 NMI January 2008 – March 2013

24. 24 Comparison of PMI and NMI January 2008 – March 2013

25. 25 NMI Annual Average Annual Average Relative to Midpoint of 50 2012 Average: 54.6% 2013 Average (through March): 55.2%

26. 26 Non-Manufacturing Business Activity Index Annual Average Relative to Midpoint of 50 2012 Average: 57.7% 2013 Average (through March): 56.6%

27. 27 n Operating rate is currently 80.2% of normal capacity. n Production capacity is expected to increase 6.7% in 2013. n Capital expenditures are expected to increase 9.1% in 2013. n Prices paid increased 1.4% through the end of April 2013. n Prices are expected to increase a total of 2.3% for all of 2013, indicating an expected increase in prices of 0.9% for the remainder of the year. Manufacturing Sector Summary

28. 28 n Manufacturing employment is expected to increase 0.9% during the remainder of 2013. n Manufacturing revenues are expected to increase 4.8% in 2013. n Overall, manufacturing is expected to continue growing in 2013. Manufacturing Sector Summary (continued)

29. 29 n Operating rate is currently 84.7% of normal capacity. n Production capacity is expected to increase 2.3% in 2013. n Capital expenditures are expected to increase 3.6% in 2013. n Prices paid increased 1.9% through the end of April 2013. n Prices are expected to increase an additional 0.5% over the remainder of the year, for a total 2013 increase of 2.4%. Non-Manufacturing Sector Summary

30. 30 n Non-manufacturing employment is expected to increase 1.3% during the balance of 2013. n Non-manufacturing revenues are expected to increase 3.5% in 2013. n The non-manufacturing sector is projected to maintain the course of sustainable growth in 2013. Non-Manufacturing Sector Summary (continued)

31. 31 n Bernard Baumohl, Chief Global Economist at The Economic Outlook Group