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Economy in Brief

U.S. ISM Index Shows Further Improvement in Manufacturing Sector Activity
by Tom Moeller  October 1, 2013

The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management rose to 56.2 during September from an unrevised 55.7 in August. The latest reading was the highest level since April 2011. It beat expectations as measured by the Action Economics Survey for a slip to 55.4. 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.

The inventories component provided the greatest lift to the September total as it recovered following two months of weakness. The factory sector employment series provided further strength with a strong rise to 55.4, its highest level since June of last year. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. The production and supplier delivery components rose slightly but the new orders index reversed roughly half of its August gain. The new export orders series fell to its lowest level since May but the order backlog component stood at its highest level since April.

The prices paid index improved further 56.5, its highest level since February. Twenty two percent of firms raised prices while just 9 percent lowered them, the least since February. 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 Sep Aug Jul Sep'12 2012 2011 2010
Composite Index 56.2 55.7 55.4 51.6 51.7 55.2 57.3
 New Orders 60.5 63.2 58.3 51.7 52.9 56.4 59.2
 Production 62.6 62.4 65.0 51.4 53.6 57.4 61.0
 Employment 55.4 53.3 54.4 53.7 53.8 57.4 57.3
 Supplier Deliveries 52.6 52.3 52.1 50.5 50.0 54.7 58.1
 Inventories 50.0 47.5 47.0 50.5 48.2 50.1 50.8
Prices Paid Index (NSA) 56.5 54.0 49.0 58.0 53.2 65.2 68.9
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