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Economy in Brief

U.S. ISM Factory Index Nudges Up But Prices Slip
by Tom Moeller  April 2, 2012

Factory sector growth remained just moderate last month. The Composite Index of industrial sector activity from the Institute For Supply Management inched up to an expected 53.4 last month from an unrevised 52.4 in February. The figure above the break-even level of 50 continued to indicate an expanding level of overall activity. During the last ten years there has been an 80% correlation between the index level and the three-month change in factory sector production.

Changes in the component indexes were mixed. Moving to the upside were the production, inventories and employment series. During the last ten years there has been an 88% correlation between the employment series level and the m/m change in factory sector payrolls. Declining were the new orders and supplier delivery indexes.

The price index, at 61.0, dipped slightly m/m but for the third consecutive month was above the break-even level of 50. Thirty six percent of firms raised prices, the most since June, while a higher fourteen 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 54.0 and more-than-reversed its February increase. The imports series dipped slightly to 53.5.

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

The Duel Mandate: Has the Fed Changed Its Objective? from the Federal Reserve Bank of St. Louis can be found here.

ISM Mfg Mar Feb Jan Mar'11 2011 2010 2009
Composite Index 53.4 52.4 54.1 59.7 55.2 57.3 46.4
 New Orders 54.5 54.9 57.6 61.9 56.4 59.2 52.0
 Production  58.3 55.3 55.7 65.9 57.4 61.0 50.8
 Employment 56.1 53.2 54.3 62.1 57.4 57.3 40.7
 Supplier Deliveries 48.0 49.0 53.6 59.8 54.7 58.1 51.6
 Inventories 50.0 49.5 49.5 49.0 50.1 50.8 37.1
Prices Paid Index (NSA) 61.0 61.5 55.5 85.0 65.2 68.9 48.3
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