Global| Jan 03 2007ISM Composite Index Recovered A Bit
by:Tom Moeller
|in:Economy in Brief
Summary
The composite index of manufacturing activity from the Institute for Supply Management recovered in December to 51.4 from 49.5 the prior month. Consensus expectations had been for less of an improvement to 50.0. During the last ten [...]
The composite index of manufacturing activity from the Institute for Supply Management recovered in December to 51.4 from 49.5 the prior month. Consensus expectations had been for less of an improvement to 50.0.
During the last ten years there has been a 67% correlation between the level of the ISM index and three month growth in factory sector industrial production.
All of the component series improved m/m with the exception of inventories. The new orders component rose to 52.1 with a 3.4 point increase that just recouped the November decline. Production also recovered its November drop and rose to 51.8 but the new export orders index fell 54.3, its lowest level since July. The series peak was in early 2004 near 60. During the last ten years there has been a 69% correlation between the level of the export order index and the q/q growth in goods exports from the GDP accounts. The imports index also fell moderately.
What Will the Next Export Boom Look Like? Some Lessons from the Late 1980s from the Federal Reserve Bank of Philadelphia can be found here.
Employment also improved modestly to 49.7, the third month in the last four below the break even level of 50. During the last ten years there has been a 77% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.
The price index, which is not included in the composite, gave back about all of its November rise and fell to the second lowest level since 2002.
During the last ten years there has been an 89% correlation between the level of the price index and the three month change in the PPI for intermediate goods less food & energy.
| ISM Manufacturing Survey | December | November | Dec. '06 | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| Composite Index | 51.4 | 49.5 | 55.6 | 53.9 | 55.5 | 60.5 |
| Prices Index (NSA) | 47.5 | 53.5 | 63.0 | 65.0 | 66.4 | 79.8 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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