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Economy in Brief

U.S. ISM Factory Sector Index Continues to Firm
by Tom Moeller  September 3, 2013

The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 55.7 during August from an unrevised 55.4 in July. The figure remained at the highest level since June 2011 and beat expectations as measured by the Action Economics Survey for a decline to 54.0. Any figure above 50 indicates an increasing level of activity in the factory sector. During the last ten years, there has been a 69% correlation between the ISM index and the q/q change in real GDP.

Continuing upward was the new orders index to 63.2, its highest level since April 2011. The export order index also picked up m/m to 55.5, its highest reading since March. The inventory index ticked up to 47.5 and recovered a piece of the July decline. The rate of supplier deliveries slowed further as indicated by a rise in this index to 52.3. Working lower was the production series to a still-high 62.4. Also, the factory sector employment series slipped to 53.3 yet that continued to show job expansion. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls.

The prices paid index rebounded to 54.0, its highest level since March. Twenty one percent of firms raised prices while 13 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 order backlog series rose to 46.5 and recovered its July slip.

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 Aug Jul Jun Aug'12 2012 2011 2010
Composite Index 55.7 55.4 50.9 50.7 51.7 55.2 57.3
 New Orders 63.2 58.3 51.9 48.5 52.9 56.4 59.2
 Production 62.4 65.0 53.4 48.9 53.6 57.4 61.0
 Employment 53.3 54.4 48.7 52.6 53.8 57.4 57.3
 Supplier Deliveries 52.3 52.1 50.0 50.2 50.0 54.7 58.1
 Inventories 47.5 47.0 50.5 53.0 48.2 50.1 50.8
Prices Paid Index (NSA) 54.0 49.0 52.5 54.0 53.2 65.2 68.9
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