Global| Feb 01 2016U.S. ISM Factory Index Contracts Again
by:Tom Moeller
|in:Economy in Brief
Summary
Activity in the factory sector continued to contract in January for the fourth consecutive month. The ISM Composite Index of factory sector activity of 48.2 compared to 48.0 in December, revised from 48.2. The reading roughly equaled [...]
Activity in the factory sector continued to contract in January for the fourth consecutive month. The ISM Composite Index of factory sector activity of 48.2 compared to 48.0 in December, revised from 48.2. The reading roughly equaled expectations for 48.0 in the Action Economics Forecast Survey. The data from the Institute for Supply Management (ISM) are diffusion indexes where a reading below 50 indicates decline.
Weakness in last month's composite index centered on another decline in the employment index. It fell to 45.9, and suggested the third month in the last four when payrolls fell. During the last ten years, there has been an 88% correlation between the index and the m/m change in factory sector employment. The inventory index held at 43.5, which indicated decumulation at nearly the fastest rate of the economic expansion. Improvement in the other activity indexes was evident. The new orders series rose to 51.5, suggesting a rise in orders for the first time in three months. the production also edged higher to a roughly neutral 50.2, about where it's been for three months. The supplier delivery index of 50.0 suggested that delivery speeds held roughly steady for the eighth straight month.
Lessened activity translated into a stable rate of price decline. The prices paid index of 34.7 was little changed m/m and reflected lower prices for the eighth straight month. Five percent (NSA) of industries reported higher prices while 38% reported lower. That figure was improved, however, from the price deflation realized by 15% of industries as recently as June.
The export order index declined to 47.0, its weakest level in four months. Orders backlogs suggested decline, as the index did all of last year.
The figures from the Institute for Supply Management can be found in Haver's USECON database. The expectations number is in Haver's AS1REPNA database.
Recent Monetary Policy is the title of today's speech by Fed Vice Chairman Stanley Fischer and it can be found here.
| ISM Mfg (SA) | Jan | Dec | Nov | Jan '15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Index | 48.2 | 48.0 | 48.4 | 53.9 | 51.3 | 55.6 | 53.8 |
| New Orders | 51.5 | 48.8 | 49.0 | 54.1 | 52.6 | 58.9 | 56.8 |
| Production | 50.2 | 49.9 | 49.8 | 57.7 | 53.5 | 59.2 | 57.5 |
| Employment | 45.9 | 48.0 | 50.8 | 54.1 | 51.0 | 54.4 | 53.1 |
| Supplier Deliveries | 50.0 | 49.8 | 49.6 | 53.3 | 50.7 | 55.0 | 51.9 |
| Inventories | 43.5 | 43.5 | 43.0 | 51.0 | 49.0 | 50.8 | 49.4 |
| Prices Paid Index (NSA) | 33.5 | 33.5 | 35.5 | 35.0 | 39.8 | 55.6 | 53.8 |
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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