Global| Sep 04 2012U.S. ISM Factory Index Falls To Near a Recovery Low
by:Tom Moeller
|in:Economy in Brief
Summary
The ISM Composite Index of industrial sector activity continued to languish last month. At 49.6 it was its lowest since July 2010 and below the break-even level of 50 for the third straight month. The figure disappointed Consensus [...]
The ISM Composite Index of industrial sector activity continued to languish last month. At 49.6 it was its lowest since July 2010 and below the break-even level of 50 for the third straight month. The figure disappointed Consensus expectations for an uptick to 50.0. During the last ten years there has been an 80% correlation between the index level and the three-month change in factory sector production.
Declines in the component series were widespread led by lower production to 47.2 from 51.3. New orders slipped to 47.1 while the employment component ticked down to 51.6. During the last ten years there's been an 88% correlation between the level of the index and the m/m change in factory sector payrolls. To the upside, the inventories series jumped four points to 53.0, its highest level in twelve months. Supplier delivery speeds slowed so the index ticked up to 49.3, its highest since January.
Reflecting weakness in economies abroad, the separate index of new export orders ticked up to 47.0 but still was near its lowest since the recession's end. The import series at 49.0 was at its recovery low.
With higher oil prices, the price index rose sharply to 54.0, its highest level since April. Twenty three percent of firms raised prices while 15 percent lowered them. 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 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.
If Interest Rates Go Negative ... Or, Be Careful What You Wish For from the Federal Reserve Bank of New York can be found here.
| ISM Mfg | Aug | Jul | Jun | Aug'11 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Composite Index | 49.6 | 49.8 | 49.7 | 52.5 | 55.2 | 57.3 | 46.4 |
| New Orders | 47.1 | 48.0 | 47.8 | 51.8 | 56.4 | 59.2 | 52.0 |
| Production | 47.2 | 51.3 | 51.0 | 51.5 | 57.4 | 61.0 | 50.8 |
| Employment | 51.6 | 52.0 | 56.6 | 53.6 | 57.4 | 57.3 | 40.7 |
| Supplier Deliveries | 49.3 | 48.7 | 48.9 | 51.2 | 54.7 | 58.1 | 51.6 |
| Inventories | 53.0 | 49.0 | 44.0 | 54.5 | 50.1 | 50.8 | 37.1 |
| Prices Paid Index (NSA) | 54.0 | 39.5 | 37.0 | 55.5 | 65.2 | 68.9 | 48.3 |
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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