Global| Sep 03 2013U.S. ISM Factory Sector Index Continues to Firm
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 55.7 during August from an unrevised 55.4 in July. The figure remained at the highest level since June 2011 and beat [...]
The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 55.7 during August from an unrevised 55.4 in July. The figure remained at the highest level since June 2011 and beat expectations as measured by the Action Economics Survey for a decline to 54.0. Any figure above 50 indicates an increasing level of activity in the factory sector. During the last ten years, there has been a 69% correlation between the ISM index and the q/q change in real GDP.
Continuing upward was the new orders index to 63.2, its highest level since April 2011. The export order index also picked up m/m to 55.5, its highest reading since March. The inventory index ticked up to 47.5 and recovered a piece of the July decline. The rate of supplier deliveries slowed further as indicated by a rise in this index to 52.3. Working lower was the production series to a still-high 62.4. Also, the factory sector employment series slipped to 53.3 yet that continued to show job expansion. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls.
The prices paid index rebounded to 54.0, its highest level since March. Twenty one percent of firms raised prices while 13 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 order backlog series rose to 46.5 and recovered its July slip.
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 | Aug | Jul | Jun | Aug'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Composite Index | 55.7 | 55.4 | 50.9 | 50.7 | 51.7 | 55.2 | 57.3 |
| New Orders | 63.2 | 58.3 | 51.9 | 48.5 | 52.9 | 56.4 | 59.2 |
| Production | 62.4 | 65.0 | 53.4 | 48.9 | 53.6 | 57.4 | 61.0 |
| Employment | 53.3 | 54.4 | 48.7 | 52.6 | 53.8 | 57.4 | 57.3 |
| Supplier Deliveries | 52.3 | 52.1 | 50.0 | 50.2 | 50.0 | 54.7 | 58.1 |
| Inventories | 47.5 | 47.0 | 50.5 | 53.0 | 48.2 | 50.1 | 50.8 |
| Prices Paid Index (NSA) | 54.0 | 49.0 | 52.5 | 54.0 | 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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