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.