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Economy in Brief

U.S. Factory Sector Growth Eases Again
by Tom Moeller  May 2, 2011

The Composite Index of activity in the factory sector from the Institute for Supply Management slipped again, last month to 60.4 from an unrevised 61.2 in March. The figure was higher than Consensus expectations for 59.6. The latest reading continued to indicate positive factory growth and was the twenty-first consecutive monthly figure above the break-even level of 50. It was up from the low of 32.5 reached in December '08.

Declines in most of the components contributed to the lower composite index. The largest m/m decline was in production to the lowest level since January. The new orders and the suppliers deliveries indexes also fell. The jobs figure held nearly constant at 62.7. (During the last ten years there has been a 90% correlation between the jobs index and the m/m change in factory sector payrolls.)

Offsetting the declines last month was a sharp increase in the inventories reading. The separate index of new export orders recovered nearly all of its March decline while the index of prices paid rose to 85.5, its highest level since July 2008 and up from the December '08 low of 18.0. Seventy-two percent of respondents reported higher prices while just one percent indicated lower prices.

The ISM figures can be found in Haver's USECON database. The forecast data is in the AS1REPNA database.

ISM Mfg Apr Mar Feb Apr'10 2010 2009 2008
Composite Index 60.4 61.2 61.4 59.6 57.3 46.3 45.5
 New Orders 61.7 63.3 68.0 63.6 59.2 51.6 42.1
 Employment 62.7 63.0 64.5 58.7 57.3 40.5 43.3
 Production 63.8 69.0 66.3 66.4 61.1 50.5 45.1
 Supplier Deliveries 60.2 63.1 59.4 59.8 58.1 51.5 51.6
 Inventories 53.6 47.4 48.8 49.7 50.8 37.1 45.5
Prices Paid Index (NSA) 85.5 85.0 82.0 78.0 68.9 48.3 66.5
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