Global| Sep 01 2005ISM Factory Index Backpedaled
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of activity in the manufacturing sector, reported by the Institute of Supply Management, backpedaled three points in August to 53.6 following a like-sized increase in July. The decline outpaced Consensus [...]
The Composite Index of activity in the manufacturing sector, reported by the Institute of Supply Management, backpedaled three points in August to 53.6 following a like-sized increase in July. The decline outpaced Consensus expectations for a modest increase to 57.0. (In light of this week's published decline in the Chicago PMI, Consensus expectations may have ratcheted down.)
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
Pricing in the factory sector firmed to the strongest since April. The prices paid index rose to 62.5 following three months of decline.
Production gave back nearly all of the prior month's gain with a 5.3 drop. Likewise, the new orders index fell 4.2 points and reversed more than all of the July increase as the export order index also fell. Inventory restocking eased as the inventory index fell for the second month to the lowest level since October 2003.
The rate of job creation eased slightly in August though the index level of 52.6 continued to indicate positive growth. During the last twenty years there has been a 67% correlation between the level of the ISM Employment Index and the three month growth in factory sector employment.
| ISM Manufacturing Survey | Aug | July | Aug '04 | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Composite Index | 53.6 | 56.6 | 59.6 | 60.5 | 53.3 | 52.4 |
| New Orders Index | 56.4 | 60.6 | 62.2 | 63.5 | 57.9 | 56.5 |
| Prices Paid Index (NSA) | 62.5 | 48.5 | 81.5 | 79.8 | 59.6 | 57.6 |
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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