Recent Updates
- US: Consumer Sentiment (Feb-final), Chicago PMI (Feb),Personal Income, Adv Trade & Inventories (Jan)
- US: Consumer Sentiment Detail (Feb-final)
- Canada: Industrial Product Prices (Jan)
- UK: Motor Vehicle Production (Jan)
- more updates...
Economy in Brief
Chicago Business Barometer Declines Sharply in February
The ISM-Chicago Purchasing Managers Business Barometer fell 4.3 points in February to 59.5...
Goods Trade Deficit Widened Slightly in January
The advance estimate of the U.S. trade deficit in goods widened slightly to $83.74 billion in January..
Japan's Industrial Sector Mounts a Comeback
Japan's IP surged in January gaining 4.3% compared to December...
Aircraft Orders Boost U.S. Durable Goods Orders in January
Manufacturers' orders for durable goods increased a much larger-than-expected 3.4% m/m (4.5% y/y) in January...
Kansas City Fed Manufacturing Index Increases Again in February
The Kansas City Fed reported that its manufacturing sector business activity index rose to 24 in February...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller February 1, 2021
• Factory activity slips m/m but remains strong y/y.
• New orders & production weaken.
• Pricing power improves further.
Activity in the factory sector weakened slightly last month. The Institute for Supply Management (ISM) reported that its Composite Index of Manufacturing Sector Activity edged lower to 58.7 during January after surging to a roughly three-year high of 60.5 in December, revised from 60.7. A reading of 60.0 had been expected in the Action Economics Forecast Survey. It was the eighth consecutive month above the break-even level of 50. During the last 15 years, there has been a 42% correlation between the composite index and the quarterly change in real GDP. Before the recession began, there had been a 67% correlation.
The ISM indicated, "The manufacturing economy continued its recovery in January. Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential."
The new orders index fell sharply to 61.1, a four-month low. A lessened 37% (NSA) of survey respondents reported stronger new orders and a reduced 12% reported a decline. The production index declined to 60.7, a six-month low. A greatly lessened 31% (NSA) of respondents reported higher production and a somewhat lessened 11% reported a decline. The inventories index eased to 50.8, but still indicated a fourth consecutive month of inventory accumulation.
To the upside last month, the employment measure rose to 52.6, the highest level since June 2019. It was increased from April's recession low of 28.2. A slightly lessened 14% (NSA) of respondents reported higher payrolls but a greatly lessened 14% reported a decline. Also increasing was the supplier delivery measure to 68.2, indicating the slowest product delivery speeds in nine months.
Pricing power continued to strengthen. The prices paid index surged to 82.1 (NSA), up significantly from last April's low of 35.3. It was the highest level since April 2011. A strengthened 62% of respondents reported higher prices compared to April's low of 10%. No respondents reported price declines, down from 39% in April.
Other series in the ISM report indicated mixed performance. The new export order measure fell m/m to 54.9, but remained up from the April 2020 low of 35.3. The import series improved to 56.8, a three-month high. It was above the break-even point of 50 for the seventh consecutive month. The order backlog measure increased to the highest level since June 2018 and remained greatly improved from the April low.
The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.
ISM Mfg (SA) | Jan | Dec | Nov | Jan'20 | 2020 | 2019 | 2018 |
---|---|---|---|---|---|---|---|
Composite Index | 58.7 | 60.5 | 57.7 | 51.1 | 52.5 | 51.2 | 58.9 |
New Orders | 61.1 | 67.5 | 65.7 | 51.8 | 54.0 | 51.2 | 61.6 |
Production | 60.7 | 64.7 | 62.2 | 54.8 | 53.8 | 51.3 | 60.8 |
Employment | 52.6 | 51.7 | 48.3 | 46.8 | 44.3 | 50.9 | 56.9 |
Supplier Deliveries | 68.2 | 67.7 | 61.7 | 53.0 | 61.6 | 52.9 | 62.0 |
Inventories | 50.8 | 51.0 | 50.8 | 48.9 | 48.8 | 49.9 | 52.9 |
Prices Paid Index (NSA) | 82.1 | 77.6 | 65.4 | 53.3 | 54.0 | 49.1 | 71.7 |