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Economy in Brief

U.S. ISM Factory Index Reaches A Six-Month High
by Tom Moeller  January 3, 2012

Further improvement in the factory sector is in evidence. The Composite Index of factory sector activity from the Institute For Supply Management rose to a six-month high of 53.9, from an unrevised 52.7 in November. The latest reading beat Consensus expectations for improvement to 53.1. The reading was the highest since June and was the twenty-ninth consecutive monthly figure above the break-even level of 50.

All but one of the index's five components rose m/m, with the strongest gain in production and employment. The production figure was its highest since April and the employment number was its best since June. During the last ten years there has been an 89% correlation between the employment series level and the m/m change in factory sector payrolls. The new orders figure also was its highest since April while the supplier deliveries component showed no change in the speed of filling orders. The inventory index reversed its November gain.

The price index rose to 47.5 but remained below the break-even level of 50 for the third consecutive month. Twenty-one percent of firms raised prices, the least since the recession's end, while twenty-six percent lowered them. 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 fell to 53.0, its best since September. Reflecting a better U.S. economy, the imports series rose above break-even for the first time since September.

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

The minutes to the latest FOMC meeting can be found here.

ISM Mfg Dec Nov Oct Dec'10 2011 2010 2009
Composite Index 53.9 52.7 50.8 58.5 55.3 57.3 46.3
 New Orders 57.6 56.7 52.4 62.0 56.5 59.3 51.7
 Production 59.9 56.6 50.1 63.0 57.5 61.1 50.5
 Employment 55.1 51.8 53.5 58.9 57.5 57.3 40.6
 Supplier Deliveries 49.9 49.9 51.3 56.7 54.7 58.1 51.5
 Inventories 47.1 48.3 46.7 51.8 50.1 50.8 37.1
Prices Paid Index (NSA) 47.5 45.0 41.0 72.5 65.2 68.9 48.3
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