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Economy in Brief

U.S. ISM Factory Index Recovers Marginally
by Tom Moeller  October 3, 2011

Downward momentum in factory sector activity stabilized last month. The Institute for Supply Management reported that its September Composite Index of factory sector activity rose slightly to 51.6 from an unrevised 50.6 in August. Regardless, the figure remained nearly the lowest since the economic recovery began two years ago. The reading beat Consensus expectations for stability at 50.5. It indicated positive, but slower, factory growth and was the twenty-sixth consecutive monthly figure above the break-even level of 50.

The performance of the index's five components remained mixed last month. The production, supplier delivery and employment series rose modestly. During the last ten years there has been a 91% correlation between the employment series level and the m/m change in factory sector payrolls. The inventory index slipped and the new orders series was unchanged.

The price reading improved slightly m/m to 56.0 in September but remained near the lowest since November, 2009. Twenty-six percent of firms raised prices, less than half that four months ago, while fourteen percent lowered them, the least in three months. During the last ten years there has been an 83% correlation between the index and the m/m change in the core intermediate producer price index.

The separate index of new export orders recovered most of the prior month's decline with a rise to a still-low 53.5. The imports series slipped m/m but it remained in its range since early-last year.

The ISM figures are diffusion indexes and can be found in Haver's USECON database. The expectations data are in the AS1REPNA database.

Lessons from Emerging Market Economies on the Sources of Sustained Growth is the title of last week's speech by Fed Chairman Ben S. Bernanke and it can be found here.

ISM Mfg Sep Aug Jul Sep'10 2010 2009 2008
Composite Index 51.6 50.6 50.9 55.3 57.3 46.3 45.5
 New Orders 49.6 49.6 49.2 51.6 59.3 51.7 42.1
 Employment 53.8 51.8 53.5 56.9 57.3 40.6 43.1
 Production 51.2 48.6 52.3 58.1 61.1 50.5 45.1
 Supplier Deliveries 51.4 50.6 50.4 53.8 58.1 51.5 51.6
 Inventories 52.0 52.3 49.3 56.0 50.8 37.1 45.5
Prices Paid Index (NSA) 56.0 55.5 59.0 70.5 68.9 48.3 66.5
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