The Composite Index from the Institute for Supply Management increased just moderately last month to 57.0 from 56.6 during November. A slightly lesser gain to 56.8 had been expected by the Bloomberg Survey. Despite the modest m/m increase, it was enough to lift the 2010 average to its highest level since 2004. The latest was the seventeenth consecutive monthly figure above the break-even 50 and was up from the low of 32.5 reached in December '08. (Any figure above the break-even point of 50 suggests rising activity.) The ISM data is available in Haver's USECON database.

Sharp recoveries in new orders and production accounted for the m/m increase in the total index. The orders index rose as 31 percent (NSA) of respondents reported higher orders and 22 percent indicated lower. Production rose as 30 percent reported higher production and eighteen reported it lower. Elsewhere there was m/m weakness. The employment index fell m/m to 55.7, though it was its thirteenth consecutive month above 50. During the last ten years there has been a 90% correlation between the index level and the m/m change in factory sector employment. At the back-end of factory sector activity, both the supplier delivery and the inventories indexes fell though both were greatly improved for the year.

Also falling was the export order index to 54.5, indicating weaker economies abroad. The figure was down from its April high of 62.0. For the year the index rose moderately to 57.8 from 48.5 in 2010. During the last ten years there has been an 88% correlation between the level of the index and the quarterly change in merchandise exports. A lessened twenty-one percent of respondents reported higher export orders while an increased twelve percent reported orders lower.

The separate index of prices paid rose to 72.5, its highest level since the April high of 78.0 and up from the December '08 low of 18.0. Forty-eight percent of respondents reported higher prices while just three percent indicated lower prices. During the last twenty years there has been an 83% correlation between the price index and the three-month change in the PPI for intermediate goods.

When Do Recessions Begin and End? from the Federal Reserve Bank of St. Louis is available here.