Global| Nov 01 2018ISM Factory Sector Index Declines; Prices Rise
by:Tom Moeller
|in:Economy in Brief
Summary
The ISM composite index of activity in the factory sector fell to 57.7 in October from 59.8 in September. It was the lowest index level since April. A reading of 59.0 had been expected in the Action Economics Forecast Survey. During [...]
The ISM composite index of activity in the factory sector fell to 57.7 in October from 59.8 in September. It was the lowest index level since April. A reading of 59.0 had been expected in the Action Economics Forecast Survey. During the last ten years, there has been a 74% correlation between the index level and q/q growth in real GDP.
The decline in the overall index included a fall in the orders series to 57.4, which was the lowest level since April of last year. The inventories index also fell sharply to 50.7, the lowest level in five months. Production slid to a four-month low of 59.9, but the supplier delivery series rose to 63.8, indicating slower product delivery speeds.
The employment index deteriorated to 56.8, but continued the trend of rising factory sector payrolls since October 2016. A lessened 23% of respondents reported rising payroll levels while a little-changed 10% reported a decline. During the last ten years there has been an 84% correlation between the employment index and the m/m change in factory sector payrolls.
The index of prices paid rose to 71.6 and made up most of the prior month's decline. It continued the rising trend in prices since March 2016. Fifty-one percent of respondents indicated higher prices while eight percent paid less.
Amongst the other ISM series, which are not seasonally adjusted, the order backlog series was steady at 55.8, down sharply from a recent high of 63.5 in May. The new export order index fell sharply to 52.2, the lowest level since November 2016. The capital expenditures index surged.
The ISM figures 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) | Oct | Sep | Aug | Oct'17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Headline Index | 57.7 | 59.8 | 61.3 | 58.5 | 57.4 | 51.4 | 51.3 |
| New Orders | 57.4 | 61.8 | 65.1 | 63.5 | 62.2 | 54.5 | 52.3 |
| Production | 59.9 | 63.9 | 63.3 | 61.0 | 61.0 | 53.8 | 59.3 |
| Employment | 56.8 | 58.8 | 58.5 | 59.8 | 56.8 | 49.2 | 50.7 |
| Supplier Deliveries | 63.8 | 61.1 | 64.5 | 60.1 | 56.8 | 51.8 | 50.8 |
| Inventories | 50.7 | 53.3 | 55.4 | 48.1 | 50.4 | 47.5 | 49.4 |
| Prices Paid Index (NSA) | 71.6 | 66.9 | 72.1 | 68.1 | 65.0 | 53.1 | 40.1 |
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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