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Economy in Brief

ISM Manufacturing Index Increases in November
by Tom Moeller  December 1, 2021

• Factory activity reverses October index decline.

• Production & employment strengthen.

• Pricing power eases.

The Institute for Supply Management (ISM) reported that its Composite Index of Manufacturing Sector Activity rose to 61.1 during November after declining to 60.8 in October. The reading remained below a March high of 64.7. A level of 61.0 had been expected in the Action Economics Forecast Survey. During the last 15 years, there has been a 41% correlation between the composite index and the quarterly change in real GDP.

The ISM indicated, "The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement."

A rise last month in the production series to 61.5 from 59.3 paced the improvement overall. It was the highest level since April. A slightly lessened 30.3% (NSA) of respondents reported higher production but 12.4% reported lower production, compared to 14.4% in October. The new orders index rose to 61.5 after falling sharply to 59.8 in October. The reading was below the March high of 68.0. To the downside, the supplier delivery series fell to 72.2 from 75.6, indicating somewhat quicker product delivery speeds. The inventories index eased to 56.8 last month from 57.0 in October. Nevertheless, the level was increased from a low of 44.8 in August 2020.

The employment index increased to 53.3 during November from 52.0 in October. It was the highest level since April, up from a low of 49.0 in August. A slightly lessened 20.5% (NSA) of respondents reported more hiring while a lessened 14.9% reported a decline in jobs.

The prices paid index declined to 82.4 in November from 85.7 in October and remained below the June high of 92.1. A lessened 67.9% (NSA) of respondents reported higher prices while an increased 3.1% reported price declines.

In other ISM series not included in the composite, the order backlog figure fell to 61.9 (NSA) from 63.6 and remained well below the high of 70.6 in May. The new export measure edged lower to 54.0 from 54.6 and remained down from a November 2020 high of 57.8. The imports index rose to 52.6 and reversed most of October's decline to 49.1.

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) Nov Oct Sep Nov '20 2020 2019 2018
Composite Index 61.1 60.8 61.1 57.7 52.5 51.2 58.9
 New Orders 61.5 59.8 66.7 65.7 54.0 51.2 61.6
 Production 61.5 59.3 59.4 62.2 53.8 51.3 60.9
 Employment 53.3 52.0 50.2 48.3 44.3 50.9 56.9
 Supplier Deliveries 72.2 75.6 73.4 61.7 61.6 52.9 62.0
 Inventories 56.8 57.0 55.6 50.8 48.8 49.9 52.9
Prices Paid Index (NSA) 82.4 85.7 81.2 65.4 54.0 49.1 71.7
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