Global| Jun 01 2006ISM Index Decline Reflected Broad Component Weakness
by:Tom Moeller
|in:Economy in Brief
Summary
The Institute of Supply Management (ISM) reported that the May Composite Index of factory sector activity reversed more than all of the prior month's gain and fell to 54.4. Consensus expectations had been for a more moderate decline [...]
The Institute of Supply Management (ISM) reported that the May Composite Index of factory sector activity reversed more than all of the prior month's gain and fell to 54.4. Consensus expectations had been for a more moderate decline to 56.0.
During the last twenty years there has been a 68% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
New orders fell for the fourth month of 2006 to the lowest level (53.7) in a year. New export orders, however, recovered about half of an April decline and rose to 55.7. During the last nineteen years there has been a 68% correlation between the level of the ISM export index and the y/y change in real exports of goods.
A 3.2 point decline in the production index to 57.2 also reversed all of the prior month's sharp gain while employment (52.9) fell for the third month this year. 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.
The inventory index fell as well to 48.0 and the supplier deliveries index eased to 57.6 from 57.7.
The price index rose 5.5 points to the highest level since October. During the last twenty years there has been a 91% correlation between the price index and the three month change in the PPI for intermediate goods less food & energy.
Are We Engineering Ourselves Out of Manufacturing Jobs? from the Federal Reserve Bank of Cleveland can be found here.
| ISM Manufacturing Survey | May | April | May '05 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Composite Index | 54.4 | 57.3 | 51.8 | 55.5 | 60.5 | 53.3 |
| New Orders Index | 53.7 | 57.6 | 51.9 | 57.4 | 63.5 | 57.9 |
| Prices Paid Index (NSA) | 77.0 | 71.5 | 58.0 | 66.4 | 79.8 | 59.6 |
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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