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Economy in Brief

U.S. ISM Index Nudges Higher While Prices Index Slips
by Tom Moeller  November 1, 2013

October was a constructive month for the manufacturing sector. The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management ticked up to 56.4 from an unrevised 56.2 in September. The latest reading was the highest level since April 2011. It beat expectations for a decline to 55.1, as measured by the Action Economics Survey. 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 again provided the greatest lift to the Composite Index as it rose to the highest level since August of last year. The supplier deliveries series index also rose, indicating the slowest delivery speeds since June 2011. New orders ticked up but the export orders series rose sharply to the highest level since April of last year. The factory sector employment series retreated to its lowest point since this past June. 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 index also dropped to it lowest level since June.

The prices paid index reversed roughly half of its prior month's gain but still was up versus the low three months ago. Twenty two percent of firms raised prices while 11 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 increased to its highest level in six months.

The figures from the Institute For Supply Management (ISM) are diffusion indexes and can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.

Taking Stock of the Labor Market Recovery from the Federal Reserve Bank of Cleveland is available here.

ISM Mfg Oct Sep Aug Oct'12 2012 2011 2010
Composite Index 56.4 56.2 55.7 51.7 51.7 55.2 57.3
 New Orders 60.6 60.5 63.2 52.8 52.9 56.4 59.2
 Production 60.8 62.6 62.4 53.3 53.6 57.4 61.0
 Employment 53.2 55.4 53.3 52.3 53.8 57.4 57.3
 Supplier Deliveries 54.7 52.6 52.3 49.9 50.0 54.7 58.1
 Inventories 52.5 50.0 47.5 50.0 48.2 50.1 50.8
Prices Paid Index (NSA) 55.5 56.5 54.0 55.0 53.2 65.2 68.9
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