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Economy in Brief

U.S. ISM Factory Index Falls While Prices Collapse
by Tom Moeller  June 1, 2012

The May ISM Composite Index of industrial sector activity fell to 53.5 from an unrevised 54.8 in April. The decline compared to Consensus expectations for a slip to 54.0. 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 mixed. Most series fell including production, supplier deliveries and inventories. The employment component also fell to 56.9. During the last ten years there has been an 88% correlation between the level of the index and the m/m change in factory sector payrolls. Working the other way, the new orders component rose to its highest level since April of last year.

The price index fell sharply to 47.5, its lowest level inn six months. Fourteen percent of firms raised prices while nineteen 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 sharply to 53.5, its lowest since December. The imports series was unchanged for the second month 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 May Apr Mar May'11 2011 2010 2009
Composite Index 53.5 54.8 53.4 54.2 55.2 57.3 46.4
 New Orders 60.1 58.2 54.5 55.0 56.4 59.2 52.0
 Production 55.6 61.0 58.3 54.6 57.4 61.0 50.8
 Employment 56.9 57.3 56.1 58.3 57.4 57.3 40.7
 Supplier Deliveries 48.7 49.2 48.0 54.4 54.7 58.1 51.6
 Inventories 46.0 48.5 50.0 48.5 50.1 50.8 37.1
Prices Paid Index (NSA) 47.5 61.0 61.0 76.5 65.2 68.9 48.3
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