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Economy in Brief

U.S. ISM Factory Index Reaches Nine-Month High; Pricing Power Improves Further
by Tom Moeller  February 1, 2013

Activity is improving in the factory sector. The Institute for Supply Management reported that its January composite index of manufacturing activity rose to 53.1 from a revised 50.2 in December. The latest beat expectations for a roughly unchanged 50.5 and earlier figures were revised due to new seasonal factors. 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.

Most of the component series improved last month including the employment reading which rose to 54.0. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. The supplier delivery index slipped, indicating that delivery speeds quickened.

The price index rose further to 56.5, the highest level since September. Twenty three percent of firms raised prices while ten 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 Jan Dec Nov Jan'12 2012 2011 2010
Composite Index 53.1 50.2 49.9 53.7 51.7 55.2 57.3
 New Orders 53.3 49.7 51.1 56.5 52.9 56.4 59.2
 Production 53.6 52.6 53.1 54.9 53.6 57.4 61.0
 Employment 54.0 51.9 50.1 55.3 53.8 57.4 57.3
 Supplier Deliveries 53.6 53.7 50.1 52.2 50.0 54.7 58.1
 Inventories 51.0 43.0 45.0 49.5 48.2 50.1 50.8
Prices Paid Index (NSA) 56.5 55.5 52.5 55.5 53.2 65.2 68.9
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