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Economy in Brief

U.S. ISM Manufacturing Index Is Depressed
by Tom Moeller  April 1, 2015

Factory sector activity remains without forward momentum. The March Composite Index from the Institute for Supply Management (ISM) declined to 51.5 following its February drop to an unrevised 52.9. It was the lowest level since May 2013. A reading of 52.5 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.

The supplier delivery index plummeted to 50.5, showing the quickest product delivery speeds since May 2013. The employment reading also fell sharply to a break-even 50.0, the lowest point since May 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. Inventories fell modestly to 51.5 as did new orders (51.8), though new orders had dropped sharply during the prior four months. The production index nudged up to 53.8, though it too was down hard in the prior four months.

The prices paid index recovered to 39.0, the highest level since November. The latest level was down, however, from 60.5 in January of last year. Ten percent of respondents indicated paying higher prices while 32% paid less.

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 Mar Feb Jan Mar'14 2014 2013 2012
Composite Index 51.5 52.9 53.5 54.4 55.7 53.8 51.7
 New Orders 51.8 52.5 52.9 56.4 59.0 56.9 52.9
 Production 53.8 53.7 56.5 57.3 59.2 57.5 53.7
 Employment 50.0 51.4 54.1 51.9 54.5 53.2 53.8
 Supplier Deliveries 50.5 54.3 52.9 53.8 55.0 51.9 50.0
 Inventories 51.5 52.5 51.0 52.5 50.8 49.4 48.2
Prices Paid Index (NSA) 39.0 35.0 35.0 59.0 55.6 53.8 53.2
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