Global| Dec 01 2011U.S. ISM Factory Index Improves
by:Tom Moeller
|in:Economy in Brief
Summary
Manufacturing activity seems to be gaining a firmer footing. The Institute for Supply Management reported that its November Composite Index of factory sector activity rose to 52.7, its highest since June, from an unrevised 50.8 in [...]
Manufacturing activity seems to be gaining a firmer footing. The Institute for Supply Management reported that its November Composite Index of factory sector activity rose to 52.7, its highest since June, from an unrevised 50.8 in October. The latest reading was slightly better than Consensus expectations for improvement to 52.0. The reading was the twenty-eighth consecutive monthly figure above the break-even level of 50.
Most of the index's five components rose m/m, with the strongest gain in production to its highest since April. The new orders series also posted a sharp increase to its highest since April. The inventories index rose moderately. To the downside was the supplier deliveries series, as well as employment which matched this cycle's low. During the last ten years there has been an 89% correlation between the employment series level and the m/m change in factory sector payrolls.
The price index rose to 45.0 but remained below the break-even level of 50 for the second month. Nineteen percent of firms raised prices, still nearly the least since the recession's end, while twenty-nine percent lowered them, near the high. 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 fell to 50.0, its lowest level since the recovery began. Reflecting weakness in the U.S. economic recovery, the imports series fell below break-even, also the lowest level since recovery began.
The ISM figures 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'10 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Composite Index | 52.7 | 50.8 | 51.6 | 58.2 | 57.3 | 46.3 | 45.5 |
| New Orders | 56.7 | 52.4 | 49.6 | 59.6 | 59.3 | 51.7 | 42.1 |
| Production | 56.6 | 50.1 | 51.2 | 58.2 | 61.1 | 50.5 | 45.1 |
| Employment | 51.8 | 53.5 | 53.8 | 59.0 | 57.3 | 40.6 | 43.1 |
| Supplier Deliveries | 49.9 | 51.3 | 51.4 | 58.1 | 58.1 | 51.5 | 51.6 |
| Inventories | 48.3 | 46.7 | 52.0 | 56.1 | 50.8 | 37.1 | 45.5 |
| Prices Paid Index (NSA) | 45.0 | 41.0 | 56.0 | 69.5 | 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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