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Economy in Brief

U.S. ISM Factory Index Falls To Near a Recovery Low
by Tom Moeller  September 4, 2012

The ISM Composite Index of industrial sector activity continued to languish last month. At 49.6 it was its lowest since July 2010 and below the break-even level of 50 for the third straight month. The figure disappointed Consensus expectations for an uptick to 50.0. During the last ten years there has been an 80% correlation between the index level and the three-month change in factory sector production.

Declines in the component series were widespread led by lower production to 47.2 from 51.3. New orders slipped to 47.1 while the employment component ticked down to 51.6. During the last ten years there's been an 88% correlation between the level of the index and the m/m change in factory sector payrolls. To the upside, the inventories series jumped four points to 53.0, its highest level in twelve months. Supplier delivery speeds slowed so the index ticked up to 49.3, its highest since January.

Reflecting weakness in economies abroad, the separate index of new export orders ticked up to 47.0 but still was near its lowest since the recession's end. The import series at 49.0 was at its recovery low.

With higher oil prices, the price index rose sharply to 54.0, its highest level since April. Twenty three percent of firms raised prices while 15 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 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. 

If Interest Rates Go Negative ... Or, Be Careful What You Wish For from the Federal Reserve Bank of New York can be found here.


ISM Mfg Aug Jul Jun Aug'11 2011 2010 2009
Composite Index 49.6 49.8 49.7 52.5 55.2 57.3 46.4
 New Orders 47.1 48.0 47.8 51.8 56.4 59.2 52.0
 Production 47.2 51.3 51.0 51.5 57.4 61.0 50.8
 Employment 51.6 52.0 56.6 53.6 57.4 57.3 40.7
 Supplier Deliveries 49.3 48.7 48.9 51.2 54.7 58.1 51.6
 Inventories 53.0 49.0 44.0 54.5 50.1 50.8 37.1
Prices Paid Index (NSA) 54.0 39.5 37.0 55.5 65.2 68.9 48.3
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