Global| Sep 01 2011U.S. ISM Factory Index Dips Just Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
The Institute for Supply Management reported that its August Composite Index of factory sector activity dropped slightly to 50.6 from an unrevised 50.9 in July. Nevertheless, the figure was nearly the lowest since the economic [...]
The Institute for Supply Management reported that its August Composite Index of factory sector activity dropped slightly to 50.6 from an unrevised 50.9 in July. Nevertheless, the figure was nearly the lowest since the economic recovery began two years ago. It compared favorably to Consensus expectations for a greater decline to 48.8. The reading continued to indicate positive, but slower, factory growth. It was the twenty-fifth consecutive monthly figure above the break-even level of 50 and was up from the low of 32.5 reached in December '08.
The performance of the index's five components was mixed last month. The production and employment series declined sharply and production was below break-even. During the last ten years there has been a 91% correlation between the employment series level and the m/m change in factory sector payrolls. A gain in the inventory component was accompanied by roughly stable indications for new orders and supplier delivery speeds.
The weakness in activity continued to hold back firms' ability to raise prices. The price reading of 55.5 was its lowest since November 2009. Twenty-nine percent of firms raised prices, less-than half that four months ago, while eighteen percent lowered them, the most in more than one year. During the last ten years there has been an 83% correlation between the index and the m/m change in the core intermediate producer price index.
The separate index of new export orders cratered m/m to 50.5, the lowest level since June 2009. The imports series continued to move sideways, as it has since early-last year.
The ISM figures are diffusion indexes and can be found in Haver's USECON database. The forecast data is in the AS1REPNA database.
| ISM Mfg | Aug | Jul | Jun | Aug'10 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Composite Index | 50.6 | 50.9 | 55.3 | 55.2 | 57.3 | 46.3 | 45.5 |
| New Orders | 49.6 | 49.2 | 51.6 | 53.7 | 59.3 | 51.7 | 42.1 |
| Employment | 51.8 | 53.5 | 59.9 | 58.2 | 57.3 | 40.6 | 43.1 |
| Production | 48.6 | 52.3 | 54.5 | 57.2 | 61.1 | 50.5 | 45.1 |
| Supplier Deliveries | 50.6 | 50.4 | 56.3 | 55.9 | 58.1 | 51.5 | 51.6 |
| Inventories | 52.3 | 49.3 | 54.1 | 50.9 | 50.8 | 37.1 | 45.5 |
| Prices Paid Index (NSA) | 55.5 | 59.0 | 68.0 | 61.5 | 68.9 | 48.3 | 66.5 |
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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