Global| Nov 01 2012U.S. ISM Indicates Improvement In Factory Sector Activity
by:Tom Moeller
|in:Economy in Brief
Summary
The manufacturing sector continues on the mend, albeit slowly. The Institute for Supply Management reported that its composite index ticked up to 51.7 in October versus an unrevised 51.5 in September. The figure beat expectations for [...]
The manufacturing sector continues on the mend, albeit slowly. The Institute for Supply Management reported that its composite index ticked up to 51.7 in October versus an unrevised 51.5 in September. The figure beat expectations for 51.1. Any figure above 50 indicates an increasing level of activity.
Higher readings for new orders (54.2) and production (52.4) were offset by lower figures for supplier deliveries (49.6), inventories (50.0) and employment (52.1). 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 fell to 48.0 and indicated declines in exports. It remained near its lowest reading since the recession's end. The import series fell sharply to 47.5, its recovery low.
The price index slipped to 55.0 with lower oil prices. Nevertheless, it remained above the break-even level of 50. Twenty three 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 | Oct | Sep | Aug | Oct'11 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Composite Index | 51.7 | 51.5 | 49.6 | 51.8 | 55.2 | 57.3 | 46.4 |
| New Orders | 54.2 | 52.3 | 47.1 | 53.4 | 56.4 | 59.2 | 52.0 |
| Production | 52.4 | 49.5 | 47.2 | 52.7 | 57.4 | 61.0 | 50.8 |
| Employment | 52.1 | 54.7 | 51.6 | 54.0 | 57.4 | 57.3 | 40.7 |
| Supplier Deliveries | 49.6 | 50.3 | 49.3 | 52.2 | 54.7 | 58.1 | 51.6 |
| Inventories | 50.0 | 50.5 | 53.0 | 46.5 | 50.1 | 50.8 | 37.1 |
| Prices Paid Index (NSA) | 55.0 | 58.0 | 54.0 | 41.0 | 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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