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Economy in Brief

U.S. ISM Factory Index Unexpectedly Improves Further
by Tom Moeller  May 1, 2012

Factory sector activity continued on the mend last month. The April ISM Composite Index of industrial sector activity rose to 54.8 from an unrevised 53.4 in March. The gain compared to Consensus expectations for a slip to 53.0. The latest was the highest level since June of last year. A 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 broadly positive, led by the gain in new orders to 58.2. That was followed by higher readings for production (61.0), supplier deliveries (49.2) and employment (57.3). 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. The inventory index declined to its lowest level (48.5) since December.

The price index was unchanged at 61.0, and for the fourth consecutive month was above the break-even level of 50. Thirty three percent of firms raised prices while eleven 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 rose to 59.0 and made up most of the March decline. The imports series was unchanged at 53.5.

The figures from the Institute For Supply Management (ISM) are diffusion indexes and can be found in Haver's USECON database. The expectations data are in the AS1REPNA database.

ISM Mfg Apr Mar Feb Apr'11 2011 2010 2009
Composite Index 54.8 53.4 52.4 59.7 55.2 57.3 46.4
 New Orders 58.2 54.5 54.9 62.7 56.4 59.2 52.0
 Production 61.0 58.3 55.3 60.8 57.4 61.0 50.8
 Employment 57.3 56.1 53.2 60.6 57.4 57.3 40.7
 Supplier Deliveries 49.2 48.0 49.0 59.7 54.7 58.1 51.6
 Inventories 48.5 50.0 49.5 54.5 50.1 50.8 37.1
Prices Paid Index (NSA) 61.0 61.0 61.5 85.5 65.2 68.9 48.3
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