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Economy in Brief

U.S. ISM Composite Factory Sector Index & Prices Weaken Further
by Tom Moeller  May 1, 2013

The factory sector continues to shed its past strength. The April composite index of manufacturing activity from the Institute for Supply Management slipped to 50.7 from an unrevised 51.3 in March. The figure slightly disappointed consensus expectations for greater stability at 51.0. 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.

Leading the overall index down was a lower employment reading. The sharp decline to 50.2 brought it to nearly the lowest level of the economic expansion. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. Also down sharply last month was the inventories series (46.5). Offsetting these declines were gains in supplier deliveries (50.9), a rise which indicated slower delivery speeds, production (53.5) and new orders (52.3). The new export orders index (54.0) also fell m/m but remained much higher than the November low of 47.0.  

The prices paid index (50.0) weakened further to the lowest level in nine months. Fifteen percent of firms raised prices while the same fifteen 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 Apr Mar Feb Apr'12 2012 2011 2010
Composite Index 50.7 51.3 54.2 54.1 51.7 55.2 57.3
 New Orders 52.3 51.4 57.8 57.6 52.9 56.4 59.2
 Production 53.5 52.2 57.6 59.0 53.6 57.4 61.0
 Employment 50.2 54.2 52.6 56.8 53.8 57.4 57.3
 Supplier Deliveries 50.9 49.4 51.4 48.7 50.0 54.7 58.1
 Inventories 46.5 49.5 51.5 48.5 48.2 50.1 50.8
Prices Paid Index (NSA) 50.0 54.5 61.5 61.0 53.2 65.2 68.9
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