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Economy in Brief

U.S. ISM Manufacturing Index Continues to Move Lower
by Tom Moeller  March 2, 2015

Factory sector momentum continues to slacken. The February reading from the Institute for Supply Management (ISM) declined to 52.9 following its January drop to an unrevised 53.5. It was the fifth m/m decline in the index in the last six months and left it at the lowest level since January of last year. A reading of 53.2 was expected in the Action Economics Forecast Survey. During the last ten years there has been a 74% correlation between the level of the index and the q/q change in real GDP.

A sharp decline in production to 53.7 and employment to 51.4 led the overall index lower. Production was at its lowest level in twelve months while the employment reading was the lowest point since June of 2013. During the last ten years, there has been a 65% correlation between the jobs number and the m/m change in factory sector employment. New orders posted a modest m/m decline to 52.5 and was at the lowest point since May 2013. The export orders index dropped to 48.5, it's lowest level since November 2012. To the upside, the inventories index increased to 52.5, its highest level since last June. The supplies delivery index rose to 54.3, still indicating sharply quickened delivery speeds since December.

The prices paid index held steady at 35.0. Reflecting the decline in energy prices, it was the lowest level since April 2009. To the downside, 38% of respondents reported paying lower prices. Just 8% reported paying higher prices, the fewest since June 2012.

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 Feb Jan Dec Feb'14 2014 2013 2012
Composite Index 52.9 53.5 55.1 54.3 55.7 53.8 51.7
 New Orders 52.5 52.9 57.8 56.1 59.0 56.9 52.9
 Production 53.7 56.5 57.7 52.1 59.2 57.5 53.7
 Employment 51.4 54.1 56.0 52.8 54.5 53.2 53.8
 Supplier Deliveries 54.3 52.9 58.6 57.8 55.0 51.9 50.0
 Inventories 52.5 51.0 45.5 52.5 50.8 49.4 48.2
Prices Paid Index (NSA) 35.0 35.0 38.5 60.0 55.6 53.8 53.2
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