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Economy in Brief

U.S. ISM Factory Index Posts A Limp Gain From Recovery Low; Pricing Power Increases Slightly
by Tom Moeller  January 2, 2013

Factory sector activity posted a modest recovery last month following several months of downward pressure. The Institute for Supply Management reported that its December composite index of manufacturing activity rose to 50.7 from an unrevised 49.5 in November. The latest level remained near the lowest since July 2009 but roughly matched expectations for 50.5. For 2012 as a whole, the index fell to 51.7 from 55.2 during 2011. Any figure above 50 indicates an increasing level of activity. During the last ten years there has been a 69% correlation between the ISM index and the q/q change in real GDP.

A higher supplier delivery index led the rise in last month's overall index and jumped to 54.7, indicating the slowest rate of product delivery since June of 2011. Also, the employment reading rose to 52.7. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. To the downside were the figures for inventories (43.0) and production (52.6). The new orders index was unchanged at 50.3. 

The price index rebounded to 55.5. Eighteen percent of firms raised prices while seven 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 Dec Nov Oct Dec'12 2012 2011 2010
Composite Index 50.7 49.5 51.7 53.1 51.7 55.2 57.3
 New Orders 50.3 50.3 54.2 54.8 52.9 56.4 59.2
 Production 52.6 53.7 52.4 58.9 53.6 57.4 61.0
 Employment 52.7 48.4 52.1 54.8 53.8 57.4 57.3
 Supplier Deliveries 54.7 50.3 49.6 51.5 50.0 54.7 58.1
 Inventories 43.0 45.0 50.0 45.5 48.2 50.1 50.8
Prices Paid Index (NSA) 55.5 52.5 55.0 47.5 53.2 65.2 68.9
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