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Economy in Brief

U.S. ISM Manufacturing Index Moves Up to Three-Month High
by Tom Moeller  June 1, 2015

Factory sector activity improved during May following several months of lackluster performance. The Composite Index from the Institute for Supply Management (ISM) improved to 52.8 following an unrevised 51.5 in April and March. The latest figure remained down, nevertheless, from the August 2014 high of 58.1. Improvement to 52.0 had been expected in the Action Economics Forecast Survey. During the last ten years, there has been a 73% correlation between the level of the index and the q/q change in real GDP.

Leading last month's rise was a recovery in the employment index following one month below break-even. The latest level (51.7) was the highest since January. During the last ten years, there has been an 89% correlation between the index level and the m/m change in factory sector payrolls. The new orders reading (55.8) also recovered to its highest level this year while inventories (51.5) recouped April's decline. The rise in the supplier deliveries index to 50.7 showed the slowest rate of product delivery in three months while production (54.5) gave back most of its April recovery.

The prices reading jumped to the highest level since October. Fifteen percent of respondents indicated higher prices while 16 percent reported them lower. During the last ten years, there has been an 85% correlation between the index and the m/m change in the core intermediate PPI.

The export order index (50.0) reversed much of its April improvement while imports rose to the highest level since January. The orders backlog series rose to its highest level in six months.

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.

ISM Mfg May Apr Mar May '14 2014 2013 2012
Composite Index 52.8 51.5 51.5 55.6 55.7 53.8 51.7
 New Orders 55.8 53.5 51.8 58.7 59.0 56.9 52.9
 Production 54.5 56.0 53.8 59.0 59.2 57.5 53.7
 Employment 51.7 48.3 50.0 53.5 54.5 53.2 53.8
 Supplier Deliveries 50.7 50.1 50.5 53.6 55.0 51.9 50.0
 Inventories 51.5 49.5 51.5 53.0 50.8 49.4 48.2
Prices Paid Index (NSA) 49.5 40.5 39.0 60.0 55.6 53.8 53.2
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