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Economy in Brief

Flat ISM Factory Index As Expected
by Tom Moeller October 1, 2004

The Purchasing Managers’ Composite Index (PMI) released by the Institute of Supply Management was about flat last month at 58.5 versus 59.0 in August. Consensus expectations had been for a reading of 58.5.

For the third quarter the index averaged 59.8 versus 62.1 in 2Q.

During the last twenty years there has been a 70% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.

Month to month the Composite Index components were mixed but each still indicated expansion. New orders (58.1) were well off the highs of earlier in the year but employment (58.1) rose as did production (61.6). Vendor performance (59.6) also fell but inventories were about flat (51.0).

The separate index of export orders fell to 51.8, down nearly 10 points from the March high.

The prices paid index slipped to the lowest level since January.

ISM Manufacturing Survey Sept Aug Sept '03 2003 2002 2001
Composite Index 58.5 59.0 54.7 53.3 52.4 43.9
  New Orders Index 58.1 61.2 60.9 58.1 56.6 46.1
Prices Paid Index (NSA) 76.0 81.5 56.0 59.6 57.6 42.9
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