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Economy in Brief

U.S. ISM Index Improves Further; Prices Also Rise
by Tom Moeller  August 1, 2014

The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management increased to 57.1 during July versus an unrevised 55.3 in June. The reading was the highest since April 2011 and exceeded consensus expectations for 56.0 as measured by the Action Economics Forecast Survey. Any figure above 50 indicates an increasing level of factory sector activity. During the last ten years, there has been a 76% correlation between the ISM index and the q/q change in real GDP.

Movement amongst the component series last month was mostly positive. The new orders reading of 63.4 was the highest since December. The employment reading jumped to the highest level (61.2) since June 2011. During the last ten years, there has been an 88% correlation between the employment index and the m/m change in factory payrolls. Also to the upside were the production (61.2) and supplier delivery (54.1) indexes, the latter indicating the slowest delivery speeds in three months. The inventories index (48.5) fell to the lowest level in six months.

Outside the overall index, the export order series level of 53.0 was the lowest since September. The import index (52.0) plunged to its lowest since January of last year. Order backlogs (49.5) improved modestly m/m.

The prices paid index series (59.5) rose modestly but remained in the range of the last six months. A higher twenty-six percent of firms raised prices and a stable seven percent lowered them. During the last ten years, there has been a 67% 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 number is in the AS1REPNA database.

Global Growth Outlook Weaker but Still Positive from the Federal Reserve Bank of Dallas can be found here.

ISM Mfg Jul Jun May Jul'13 2013 2012 2011
Composite Index 57.1 55.3 55.4 54.9 53.9 51.8 55.2
 New Orders 63.4 58.9 56.9 59.1 57.2 53.1 56.4
 Production 61.2 60.0 61.0 60.8 57.7 53.8 57.4
 Employment 58.2 52.8 52.8 55.5 53.2 53.8 57.4
 Supplier Deliveries 54.1 51.9 53.2 52.0 51.9 50.0 54.7
 Inventories 48.5 53.0 53.0 47.0 49.4 48.2 50.1
Prices Paid Index (NSA) 59.5 58.0 60.0 49.0 53.8 53.2 65.2
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