Global| Dec 01 2015U.S. ISM Factory Index Falls to Lowest Level Since 2009
by:Tom Moeller
|in:Economy in Brief
Summary
Activity in the manufacturing sector declined last month according the Institute for Supply Management. Its Composite Index of factory sector activity fell to 48.6 during November from an unrevised October reading of 50.1. This was [...]
Activity in the manufacturing sector declined last month according the Institute for Supply Management. Its Composite Index of factory sector activity fell to 48.6 during November from an unrevised October reading of 50.1. This was the lowest level since June 2009, the final month of the last recession. The decline compared to rough stability at 50.4 called for in the Action Economics Forecast Survey.
Declines in most component series were evident. The new orders figure fell to 48.9, the lowest level since March 2009 while the production reading also moved below break-even to 49.2. These declines reflected an effort to reduce inventories as the index fell to 48.0, down sharply for the second straight month.
These declines didn't keep manufactures from raising employment. The jobs index rose to 51.3, its highest level since July. During the last ten years there has been an 88% percent correlation between the index and the m/m change in factory sector payrolls. The supplier delivery index also edged up to 50.6, indicating the slowest delivery speeds in three months.
Weaker activity readings led to reduced pricing power. The prices index fell to 35.5, is lowest level since April 2009. Thirty percent (NSA) of respondents reported paying lower prices while just 1% reported them higher.
The export order index held steady m/m at 47.5, but was down from the 2011 high of 62.5. The import index nudged up to 49.0 and the order backlog index gained to 43.0.
The figures from the Institute For Supply Management (ISM) are diffusion indexes. A reading above 50 represents growth in factory sector activity. They can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.
| ISM Mfg (SA) | Nov | Oct | Sep | Nov '14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Index | 48.6 | 50.1 | 50.2 | 57.6 | 55.7 | 53.8 | 51.7 |
| New Orders | 48.9 | 52.9 | 50.1 | 62.1 | 59.0 | 56.9 | 52.9 |
| Production | 49.2 | 52.9 | 51.8 | 62.6 | 59.2 | 57.5 | 53.7 |
| Employment | 51.3 | 47.6 | 50.5 | 54.6 | 54.5 | 53.2 | 53.8 |
| Supplier Deliveries | 50.6 | 50.4 | 50.2 | 57.0 | 55.0 | 51.9 | 50.0 |
| Inventories | 43.0 | 46.5 | 48.5 | 51.5 | 50.8 | 49.4 | 48.2 |
| Prices Paid Index (NSA) | 35.5 | 39.0 | 38.0 | 44.5 | 55.6 | 53.8 | 53.2 |
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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