Global| Jan 02 2013U.S. ISM Factory Index Posts A Limp Gain From Recovery Low; Pricing Power Increases Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
Factory sector activity posted a modest recovery last month following several months of downward pressure. The Institute for Supply Management reported that its December composite index of manufacturing activity rose to 50.7 from an [...]
Factory sector activity posted a modest recovery last month following several months of downward pressure. The Institute for Supply Management reported that its December composite index of manufacturing activity rose to 50.7 from an unrevised 49.5 in November. The latest level remained near the lowest since July 2009 but roughly matched expectations for 50.5. For 2012 as a whole, the index fell to 51.7 from 55.2 during 2011. Any figure above 50 indicates an increasing level of activity. During the last ten years there has been a 69% correlation between the ISM index and the q/q change in real GDP.
A higher supplier delivery index led the rise in last month's overall index and jumped to 54.7, indicating the slowest rate of product delivery since June of 2011. Also, the employment reading rose to 52.7. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. To the downside were the figures for inventories (43.0) and production (52.6). The new orders index was unchanged at 50.3.
The price index rebounded to 55.5. Eighteen percent of firms raised prices while seven 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 | Dec | Nov | Oct | Dec'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Composite Index | 50.7 | 49.5 | 51.7 | 53.1 | 51.7 | 55.2 | 57.3 |
| New Orders | 50.3 | 50.3 | 54.2 | 54.8 | 52.9 | 56.4 | 59.2 |
| Production | 52.6 | 53.7 | 52.4 | 58.9 | 53.6 | 57.4 | 61.0 |
| Employment | 52.7 | 48.4 | 52.1 | 54.8 | 53.8 | 57.4 | 57.3 |
| Supplier Deliveries | 54.7 | 50.3 | 49.6 | 51.5 | 50.0 | 54.7 | 58.1 |
| Inventories | 43.0 | 45.0 | 50.0 | 45.5 | 48.2 | 50.1 | 50.8 |
| Prices Paid Index (NSA) | 55.5 | 52.5 | 55.0 | 47.5 | 53.2 | 65.2 | 68.9 |
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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