Global| May 01 2013U.S. ISM Composite Factory Sector Index & Prices Weaken Further
by:Tom Moeller
|in:Economy in Brief
Summary
The factory sector continues to shed its past strength. The April composite index of manufacturing activity from the Institute for Supply Management slipped to 50.7 from an unrevised 51.3 in March. The figure slightly disappointed [...]
The factory sector continues to shed its past strength. The April composite index of manufacturing activity from the Institute for Supply Management slipped to 50.7 from an unrevised 51.3 in March. The figure slightly disappointed consensus expectations for greater stability at 51.0. Any figure above 50 indicates an increasing level of activity. During the last ten years, there has been a 69% correlation between the ISM index and the q/q change in real GDP.
Leading the overall index down was a lower employment reading. The sharp decline to 50.2 brought it to nearly the lowest level of the economic expansion. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. Also down sharply last month was the inventories series (46.5). Offsetting these declines were gains in supplier deliveries (50.9), a rise which indicated slower delivery speeds, production (53.5) and new orders (52.3). The new export orders index (54.0) also fell m/m but remained much higher than the November low of 47.0.
The prices paid index (50.0) weakened further to the lowest level in nine months. Fifteen percent of firms raised prices while the same fifteen percent lowered them. During the last ten years there has been a 65% correlation between the index and the m/m change in the intermediate producer price index.
The figures from the Institute For Supply Management (ISM) are diffusion indexes and can be found in Haver's USECON database. The expectations data are in the AS1REPNA database.
| ISM Mfg | Apr | Mar | Feb | Apr'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Composite Index | 50.7 | 51.3 | 54.2 | 54.1 | 51.7 | 55.2 | 57.3 |
| New Orders | 52.3 | 51.4 | 57.8 | 57.6 | 52.9 | 56.4 | 59.2 |
| Production | 53.5 | 52.2 | 57.6 | 59.0 | 53.6 | 57.4 | 61.0 |
| Employment | 50.2 | 54.2 | 52.6 | 56.8 | 53.8 | 57.4 | 57.3 |
| Supplier Deliveries | 50.9 | 49.4 | 51.4 | 48.7 | 50.0 | 54.7 | 58.1 |
| Inventories | 46.5 | 49.5 | 51.5 | 48.5 | 48.2 | 50.1 | 50.8 |
| Prices Paid Index (NSA) | 50.0 | 54.5 | 61.5 | 61.0 | 53.2 | 65.2 | 68.9 |
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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