Global| Aug 03 2015U.S. ISM Factory Index Unexpectedly Falls to Three-Month Low
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index from the Institute for Supply Management (ISM) fell to 52.7 during July following unrevised gains to 53.5 and 52.8 during the prior two months. Improvement to 53.8 had been expected in the Action Economics Forecast [...]
The Composite Index from the Institute for Supply Management (ISM) fell to 52.7 during July following unrevised gains to 53.5 and 52.8 during the prior two months. Improvement to 53.8 had been expected in the Action Economics Forecast Survey. During the last ten years, there has been a 73% correlation between the level of the index and the q/q change in real GDP.
The employment index declined to 52.7 and reversed most its June gain. It nevertheless remained higher than an April low of 48.3. During the last ten years, there has been an 89% correlation between the index level and the m/m change in factory sector payrolls. The inventories reading also fell sharply to a three-month low. The production series improved notably and new orders edged higher. The supplier deliveries index remained stable, continuing to indicate the quickest product delivery speeds since April 2012.
The prices reading eased to the lowest level since April. Nine percent of respondents indicated higher prices while 21 percent reported them lower. During the last ten years, there has been an 85% correlation between the index and the m/m change in the core intermediate PPI.
The export order index fell to the lowest level since March while imports also eased significantly. The orders backlog series declined sharply to the lowest level since late in 2012.
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) | Jul | Jun | May | Jul '14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Index | 52.7 | 53.5 | 52.8 | 56.4 | 55.7 | 53.8 | 51.7 |
| New Orders | 56.5 | 56.0 | 55.8 | 62.0 | 59.0 | 56.9 | 52.9 |
| Production | 56.0 | 54.0 | 54.5 | 60.9 | 59.2 | 57.5 | 53.7 |
| Employment | 52.7 | 55.5 | 51.7 | 56.3 | 54.5 | 53.2 | 53.8 |
| Supplier Deliveries | 48.9 | 48.8 | 50.7 | 54.3 | 55.0 | 51.9 | 50.0 |
| Inventories | 49.5 | 53.0 | 51.5 | 48.5 | 50.8 | 49.4 | 48.2 |
| Prices Paid Index (NSA) | 44.0 | 49.5 | 49.5 | 59.5 | 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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