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Economy in Brief

U.S. ISM Indicates Improvement In Factory Sector Activity
by Tom Moeller  November 1, 2012

The manufacturing sector continues on the mend, albeit slowly. The Institute for Supply Management reported that its composite index ticked up to 51.7 in October versus an unrevised 51.5 in September. The figure beat expectations for 51.1. Any figure above 50 indicates an increasing level of activity.   

Higher readings for new orders (54.2) and production (52.4) were offset by lower figures for supplier deliveries (49.6), inventories (50.0) and employment (52.1). During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. The separate index of new export orders fell to 48.0 and indicated declines in exports. It remained near its lowest reading since the recession's end. The import series fell sharply to 47.5, its recovery low.

The price index slipped to 55.0 with lower oil prices. Nevertheless, it remained above the break-even level of 50. Twenty three percent of firms raised prices while thirteen percent lowered them. During the last ten years there has been a 65% correlation between the index and the m/m change in the 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. 

 

ISM Mfg Oct Sep Aug Oct'11 2011 2010 2009
Composite Index 51.7 51.5 49.6 51.8 55.2 57.3 46.4
 New Orders 54.2 52.3 47.1 53.4 56.4 59.2 52.0
 Production 52.4 49.5 47.2 52.7 57.4 61.0 50.8
 Employment 52.1 54.7 51.6 54.0 57.4 57.3 40.7
 Supplier Deliveries 49.6 50.3 49.3 52.2 54.7 58.1 51.6
 Inventories 50.0 50.5 53.0 46.5 50.1 50.8 37.1
Prices Paid Index (NSA) 55.0 58.0 54.0 41.0 65.2 68.9 48.3
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