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Economy in Brief

ISM Index Fell As Expected and Still Firm
by Tom Moeller December 1, 2005

The Institute of Supply Management (ISM) reported that the November Composite Index of activity in the manufacturing sector fell one point to 58.1. The decline about matched Consensus expectations and the average of the last three months, at 58.9, was the highest in over a year.

During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.

As during October, three of the index's five components fell last month. New orders fell another 1.9 points but remained well up from the May low. The moderate decline in production also left the level up from the Spring low and the pace of supplier deliveries quickened to the fastest pace since August .

Job creation in the factory sector improved to the best level since February with a 1.6 point gain. During the last twenty years there has been a 67% correlation between the level of the ISM Employment Index and the three month growth in factory sector employment.

Pricing power in the factory sector eased to the lowest level since August with a ten point m/m decline.

ISM Manufacturing Survey Nov Oct Nov '04 2004 2003 2002
Composite Index 58.1 59.1 57.6 60.5 53.3 52.4
  New Orders Index 59.8 61.7 60.7 63.5 57.9 56.5
Prices Paid Index (NSA) 74.0 84.0 74.0 79.8 59.6 57.6
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