Global| Jul 03 2006ISM Index Disappointing Again in June, but Orders Up
by:Tom Moeller
|in:Economy in Brief
Summary
The June Composite Index of factory sector activity reported by the Institute of Supply Management (ISM) slipped to 53.8 from 54.4 the month prior. Consensus expectations had been for a slight increase to 55.0. During the last twenty [...]
The June Composite Index of factory sector activity reported by the Institute of Supply Management (ISM) slipped to 53.8 from 54.4 the month prior. Consensus expectations had been for a slight increase to 55.0.
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.
A 4.2 point drop in the employment index to 48.7 dropped the reading below the break even level of 50 for the first time in over a year. During the last twenty years there has been a 66% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.
The production index also fell for the second consecutive month to its lowest (55.1) since early 2003 and the inventory index (46.9) fell for the fourth month this year.
New orders (57.9) improved for the first month in the last four and recovered most of the prior two months' decline. New export orders slipped modestly m/m and at 55.4 were down from the highs of the prior nine months. 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.
An index of order backlogs rose moderately to 54.0 following two months of sharp decline while the import index was unchanged at a still strong 56.5.
The price index slipped modestly following several m/m jumps earlier this year. 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.
The Puzzling Convergence in Foreign Exchange Volatility from the Federal Reserve Bank of St. Louis is available here.
| ISM Manufacturing Survey | June | May | June '05 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Composite Index | 53.8 | 54.4 | 54.0 | 55.5 | 60.5 | 53.3 |
| New Orders Index | 57.9 | 53.7 | 57.2 | 57.4 | 63.5 | 57.9 |
| Prices Paid Index (NSA) | 76.5 | 77.0 | 50.5 | 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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