Global| Dec 02 2019ISM Manufacturing Index Slips But Pricing Improves
by:Tom Moeller
|in:Economy in Brief
Summary
The ISM Manufacturing Diffusion Index eased to 48.1 during November after rising slightly to 48.3 in October. A reading of 49.1 had been expected in the Action Economics Forecast Survey. Since 2009, there has been a 71% correlation [...]
The ISM Manufacturing Diffusion Index eased to 48.1 during November after rising slightly to 48.3 in October. A reading of 49.1 had been expected in the Action Economics Forecast Survey. Since 2009, there has been a 71% correlation between the composite index and the quarterly change in real GDP.
Changes in the component indexes were mixed last month. The production series improved to 49.1, its highest level in three months. The supplier delivery series rose to 52.0, indicating the slowest product delivery speeds since July. Nevertheless, the index remained well below the high of 67.6 during June of last year. Offsetting these increases, the new orders index fell to 47.2 and continued its decline from the December 2017 high of 67.3. The inventories index fell to 45.5, suggesting the quickest rate of inventory decumulation in over three years.
The employment index fell to 46.6. Fourteen percent of survey respondents reported increased hiring while 21% reported a decline. During the last 15 years, there has been an 81% correlation between the index level and the m/m change in factory sector payrolls.
The prices paid index improved to 46.7 after declining to 45.5 in October. Fifteen percent of survey respondents indicated higher prices while 21% reported price declines.
Amongst other series reported by the ISM, the export order index declined slightly following a surge during October. At 47.9, it remained below the 62.8 high in February 2018. The import index rose slightly. The order backlog index fell to a four-year low.
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) | Nov | Oct | Sep | Nov'18 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Headline Index | 48.1 | 48.3 | 47.8 | 58.8 | 58.8 | 57.4 | 51.3 |
| New Orders | 47.2 | 49.1 | 47.3 | 61.8 | 61.5 | 62.2 | 54.5 |
| Production | 49.1 | 46.2 | 47.3 | 59.9 | 60.7 | 60.9 | 53.8 |
| Employment | 46.6 | 47.7 | 46.3 | 57.7 | 56.9 | 56.8 | 49.1 |
| Supplier Deliveries | 52.0 | 49.5 | 51.1 | 61.5 | 62.0 | 56.8 | 51.8 |
| Inventories | 45.5 | 48.9 | 46.9 | 52.9 | 52.9 | 50.4 | 47.5 |
| Prices Paid Index (NSA) | 46.7 | 45.5 | 49.7 | 60.7 | 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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