Global| Feb 02 2015U.S. ISM Manufacturing Index Is Weakest In Twelve Months
by:Tom Moeller
|in:Economy in Brief
Summary
Factory sector activity has lost steam. The latest reading from the Institute for Supply Management (ISM) declined to 53.5 following its December drop to 55.1. The number was the lowest since January 2014 and down from an August high [...]
Factory sector activity has lost steam. The latest reading from the Institute for Supply Management (ISM) declined to 53.5 following its December drop to 55.1. The number was the lowest since January 2014 and down from an August high of 58.1. A reading of 54.8 was expected in the Action Economics Forecast Survey.
A sharp decline in new orders to 52.9 and a lower supplier delivery number, also of 52.9, led the overall index lower. The latest new orders index was the lowest in a year while the vendor delivery index represented the quickest delivery speeds since September. A separate index of export orders fell to 49.5, continuing a downtrend in place since early-2011. The employment reading index fell to 54.1, its weakest figure since June. During the last ten years there has been an 87% correlation between the jobs number and the m/m change in factory sector employment. Production at 56.5 was at its lowest level since February but inventories bounced up to the highest point in six months.
The prices paid index fell to 35.0 reflecting the decline in energy prices. It was the lowest level since April 2009. To the downside, 41% of respondents reported paying lower prices, the most since April 2009. Just 11% reported paying higher prices, the fewest since July 2012.
Order backlogs also fell to the lowest level since July 2013 and inventories showed the easiest rate of accumulation since April.
The figures from the Institute For Supply Management (ISM) are diffusion indexes and can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.
| ISM Mfg | Jan | Dec | Nov | Jan'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Composite Index | 53.5 | 55.1 | 57.6 | 51.8 | 55.7 | 53.8 | 51.7 |
| New Orders | 52.9 | 57.8 | 62.1 | 52.8 | 59.0 | 56.9 | 52.9 |
| Production | 56.5 | 57.7 | 62.6 | 56.0 | 59.2 | 57.5 | 53.7 |
| Employment | 54.1 | 56.0 | 54.6 | 52.6 | 54.5 | 53.2 | 53.8 |
| Supplier Deliveries | 52.9 | 58.6 | 57.0 | 53.8 | 55.0 | 51.9 | 50.0 |
| Inventories | 51.0 | 45.5 | 51.5 | 44.0 | 50.8 | 49.4 | 48.2 |
| Prices Paid Index (NSA) | 35.0 | 38.5 | 44.5 | 60.5 | 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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