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Economy in Brief

U.S. ISM Manufacturing Index Remains Weak
by Tom Moeller  May 1, 2015

Factory sector activity garnered no momentum last month following sharp deterioration during the winter. The April Composite Index from the Institute for Supply Management (ISM) held steady at 51.5 with the March reading unrevised. The latest figures remained down from the August 2014 high of 58.1, reaching the lowest level since May 2013. Improvement to 52.0 had been 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.

Showing improvement last month was the production series to 56.0. It remained, however, below its August high of 63.1. Therefore, only modest growth was indicated. New orders rose to 53.5, but here again the index remained well below its August high of 63.9.

The employment reading fell below break-even to 48.3, suggesting negative job growth. It moved to the lowest point since September 2009. During the last ten years, there has been a 65% correlation between the jobs number and the m/m change in factory sector employment. Also declining was the supplier delivery index. The slip to 50.1 followed a plummet during March and indicated the quickest product delivery speeds since May 2013. The decline in the inventories index to 49.5 suggested decumulation for the first time since December.

The prices paid index recovered for the second straight month. At 40.5, it was the highest level since November. The latest level was down, however, from 60.5 in January of last year. Seven percent (NSA) of respondents indicated paying higher prices while 26% paid less.

Export orders improved to 51.5, the highest level since December but still was below the 59.5 level reached in November 2013. The import orders series recovered its March decline with a rise to 54.0 but remained below last year's high of 58.0. Order backlogs held steady at 49.5, down from 57.5 in March of last year.

The figures from the Institute For Supply Management (ISM) are diffusion indexes. A reading above 50 represents growth in factory sector activity. They can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.

Job Switching and Wage Growth from the Federal Reserve Bank of Chicago is available here.

ISM Mfg Apr Mar Feb Apr '14 2014 2013 2012
Composite Index 51.5 51.5 52.9 55.3 55.7 53.8 51.7
 New Orders 53.5 51.8 52.5 56.2 59.0 56.9 52.9
 Production 56.0 53.8 53.7 57.1 59.2 57.5 53.7
 Employment 48.3 50.0 51.4 54.7 54.5 53.2 53.8
 Supplier Deliveries 50.1 50.5 54.3 55.4 55.0 51.9 50.0
 Inventories 49.5 51.5 52.5 53.0 50.8 49.4 48.2
Prices Paid Index (NSA) 40.5 39.0 35.0 56.5 55.6 53.8 53.2
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