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Economy in Brief

U.S. ISM Manufacturing Index Suggests Firm Activity; Prices Plunge
by Tom Moeller  December 1, 2014

Despite a slip in the November ISM Composite Index of Factory Sector Activity to 58.7, improvement in factory sector activity continues. The latest reading left the three-month average at 58.1, close to its highest level since early-2011. Expectations in the Action Economics Forecast Survey had been for 58.9.

Slight m/m improvement in new orders brought the three-month average to its highest point since early-2004. An improved supplier deliveries index indicated the slowest delivery speeds in nine months. Off slightly m/m was the production measure, though on a three-month basis it too was at the best level since early-2004. The employment reading declined m/m following its Q3 jump, but continued to suggest improvement in factory sector hiring. During the last ten years, there has been an 88% correlation between the index level and the m/m change in factory sector payroll employment. The inventories reading retraced its October gain.

Order backlogs gained to the best level since April while new export orders rose to the highest point in three months.

Pricing power diminished greatly last month. The prices index fell nine points to its lowest level since July, 2012. A greatly lessened 14 percent of respondents paid higher prices while 25 percent paid less, the most since July, 2010.

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.

ISM Mfg Nov Oct Sep Nov'13 2013 2012 2011
Composite Index 58.7 59.0 56.6 57.0 53.9 51.8 55.2
 New Orders 66.0 65.8 60.0 63.4 57.2 53.1 56.4
 Production 64.4 64.8 64.6 62.4 57.7 53.8 57.4
 Employment 54.9 55.5 54.6 55.4 53.2 53.8 57.4
 Supplier Deliveries 56.8 56.2 52.2 53.3 51.9 50.0 54.7
 Inventories 51.5 52.5 51.5 50.5 49.4 48.2 50.1
Prices Paid Index (NSA) 44.5 53.5 59.5 52.5 53.8 53.2 65.2
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