Global| Dec 03 2012U.S. ISM Factory Index Falls to Recovery Low While Pricing Pressure Eases
by:Tom Moeller
|in:Economy in Brief
Summary
The Institute for Supply Management reported that its composite index of manufacturing activity fell to 49.5 in November from an unrevised 51.7 in October. The latest level was the lowest since July 2009 and it was well short of [...]
The Institute for Supply Management reported that its composite index of manufacturing activity fell to 49.5 in November from an unrevised 51.7 in October. The latest level was the lowest since July 2009 and it was well short of expectations for 51.5. Any figure above 50 indicates an increasing level of activity. During the last ten years there has been a 70% correlation between the ISM index and the q/q change in real GDP.
Lower readings for new orders (50.3) and inventories (45.0) were offset by higher figures for production (53.7) and supplier deliveries (50.3. In addition, the lower employment index (48.4) indicated payroll contraction and was at nearly the lowest level of the recovery. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. The separate index of new export orders dropped to 47.0 and continued to indicate declines in exports. It was near its lowest reading since the recession's end. The import series improved slightly from its recovery low to 48.0.
The price index fell to 52.5 with lower oil prices and economic weakness. Nevertheless, it remained above the break-even level of 50. Eighteen percent of firms raised prices while thirteen 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 | Nov | Oct | Sep | Nov'11 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Composite Index | 49.5 | 51.7 | 51.5 | 52.2 | 55.2 | 57.3 | 46.4 |
| New Orders | 50.3 | 54.2 | 52.3 | 55.0 | 56.4 | 59.2 | 52.0 |
| Production | 53.7 | 52.4 | 49.5 | 55.7 | 57.4 | 61.0 | 50.8 |
| Employment | 48.4 | 52.1 | 54.7 | 52.4 | 57.4 | 57.3 | 40.7 |
| Supplier Deliveries | 50.3 | 49.6 | 50.3 | 51.3 | 54.7 | 58.1 | 51.6 |
| Inventories | 45.0 | 50.0 | 50.5 | 46.5 | 50.1 | 50.8 | 37.1 |
| Prices Paid Index (NSA) | 52.5 | 55.0 | 58.0 | 45.0 | 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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