Global| May 01 2019ISM Manufacturing Index Declines Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The ISM manufacturing index unexpectedly fell to 52.8 in April from 55.3 in March, making it the weakest reading since October 2016. The index remained below its expansion peak of 60.8 last August. The Action Economics Forecast Survey [...]
The ISM manufacturing index unexpectedly fell to 52.8 in April from 55.3 in March, making it the weakest reading since October 2016. The index remained below its expansion peak of 60.8 last August. The Action Economics Forecast Survey anticipated m/m improvement to 55.0. Since 2008, there has been a 73% correlation between the index level and quarterly growth in real GDP.
Notable weakness last month was evident in several series in the ISM survey. The new orders index fell to 51.7 from 57.4. The reading was below the December 2017 peak of 67.3. The production reading of 52.3 compared to 55.8 in March and was the lowest figure since August 2016.
The employment figure fell to 52.4 and roughly equaled its lowest level since November 2016. A lessened 20% of respondents reported higher payrolls while a steady 12% reported a decline. Since 2008 there has been an 84% correlation between the employment index and the m/m change in factory sector payrolls.
The prices paid series, which is not part of the composite series, declined to 50.0 from 54.3, down from the high of 79.5 in May of last year. A steady 19% of respondents reported higher prices while lower prices were also reported by 19%.
Improvement m/m was registered in the inventories index. Its rise to 52.9 placed it in line with the readings since early last year. The supplier delivery index was little changed at 54.6, down sharply since the high of 67.6 last June. It's now indicating notably quicker product deliver speeds.
Amongst other series in the ISM survey, the export index fell sharply to the lowest level since early 2016, and it suggested outright declines in exports. The order backlog measure rose slightly m/m but also remained well below its May 2018 high.
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. Commodity prices can be found in USECON as well as the CMDTY database. The expectations number is available in Haver's AS1REPNA database.
| ISM Mfg (SA) | Apr | Mar | Feb | Apr'18 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Headline Index | 52.8 | 55.3 | 54.2 | 57.9 | 58.8 | 57.4 | 51.3 |
| New Orders | 51.7 | 57.4 | 55.5 | 61,7 | 61.4 | 62.2 | 54.5 |
| Production | 52.3 | 55.8 | 54.8 | 58.6 | 60.7 | 60.9 | 53.8 |
| Employment | 52.4 | 57.5 | 52.3 | 55.2 | 56.9 | 56.8 | 49.1 |
| Supplier Deliveries | 54.6 | 54.2 | 54.9 | 61.1 | 62.0 | 56.8 | 51.8 |
| Inventories | 52.9 | 51.8 | 53.4 | 52.9 | 52.9 | 50.4 | 47.5 |
| Prices Paid Index (NSA) | 50.0 | 54.3 | 49.4 | 79.3 | 71.7 | 65.0 | 53.1 |
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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