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Economy in Brief

U.S. ISM Index Recovers Earlier Weakness While Prices Strengthen
by Tom Moeller  June 2, 2014

The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 55.4 during May from 54.9 in April. Due to technical difficulties at the ISM, this seasonally adjusted figure differs from the one issued initially which showed decline to 53.2. The new reading was the highest since December but remained below the November peak of 57.0. The latest figure roughly matched consensus expectations for 55.5 as measured by the Action Economics Forecast Survey. Any figure above 50 indicates an increasing level of factory sector activity. During the last ten years, there has been a 76% correlation between the ISM index and the q/q change in real GDP.

Movement amongst the component series last month was mixed. The production series rose sharply and recovered most its decline earlier this year. Also rising moderately was the new orders index. To the downside was the supplier deliveries index. The latest reading indicated the quickest delivery speeds since September. Also moving lower was the employment reading which reversed half of its April gain. During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. Unchanged m/m was the inventory reading at the highest level since August 2012.

The export order series fell modestly but remained up sharply versus twelve months ago while the import index fell, reversing its April jump. Order backlogs fell to the lowest level in three months.

The prices paid index series improved and recovered two months of decline. Thirty one percent of firms raised prices while eleven percent lowered them. During the last ten years, there has been a 67% 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 number is in the AS1REPNA database.

Just Released: What Kinds of Jobs Have Been Created during the Recovery? from the Federal Reserve Bank of New York can be found here.

ISM Mfg May Apr Mar May'13 2013 2012 2011
Composite Index 55.4 54.9 53.7 50.0 53.9 51.8 55.2
 New Orders 56.9 55.1 55.1 49.6 57.2 53.1 56.4
 Production 61.0 55.7 55.9 52.5 57.7 53.8 57.4
 Employment 52.8 54.7 51.1 49.0 53.2 53.8 57.4
 Supplier Deliveries 53.2 55.9 54.0 49.7 51.9 50.0 54.7
 Inventories 53.0 53.0 52.5 49.0 49.4 48.2 50.1
Prices Paid Index (NSA) 60.0 56.5 59.0 49.5 53.8 53.2 65.2
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