Global| Feb 01 2006ISM Index Eased
by:Tom Moeller
|in:Economy in Brief
Summary
For January, the Institute of Supply Management (ISM) reported that the Composite Index of activity in the manufacturing sector eased to 54.8 from an upwardly revised level of 55.6 in December. It was the third consecutive monthly [...]
For January, the Institute of Supply Management (ISM) reported that the Composite Index of activity in the manufacturing sector eased to 54.8 from an upwardly revised level of 55.6 in December. It was the third consecutive monthly decline and left the index down sharply from the monthly peaks during 2003 & 2004 near 63. Consensus expectations for 55.4.
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.
Four of the index's five components fell last month led by a 2.3 point drop in employment to the lowest level since June. 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 new orders index fell 1.1 points and, at 58.0, is well below December 2003 peak of 71.6. Production fell 1.2 points to 56.6 and the inventory index slipped 0.8 points to 46.5, down sharply from the peak last March of 53.7. Only the supplier deliveries index rose in January to 55.3 but it remained down sharply from October's level of 60.8.
Prices continued to rise. A two point increase in the index to 65.0 nevertheless left the figure down from the recent peak of 84.0 in October. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.
| ISM Manufacturing Survey | Jan | Dec | Jan '05 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Composite Index | 54.8 | 55.6 | 56.3 | 55.5 | 60.5 | 53.3 |
| New Orders Index | 58.0 | 59.1 | 57.3 | 57.4 | 63.5 | 57.9 |
| Prices Paid Index (NSA) | 65.0 | 63.0 | 69.0 | 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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