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Economy in Brief

U.S. ISM Factory Index and Prices Continue to Deteriorate to 2009 Lows
by Tom Moeller  January 4, 2016

Activity in the manufacturing sector fell to the weakest level since June 2009. The ISM Composite Index of factory sector activity fell to 48.2 during December from an unrevised 48.6 in November. The reading disappointed expectations for 49.0 in the Action Economics Forecast Survey. For the year as a whole, the index averaged 51.4, also its lowest level since 2009. The data from the Institute for Supply Management are diffusion indexes where a reading below 50 indicates decline.

Weakness in last month's composite centered on the decline in the employment index. It backpedaled to 48.1, the third month in 2015 with falling payrolls. For the year as a whole, it averaged 51.0, the lowest reading since 2009. An easier supplier delivery reading of 50.3 suggested the quickest product delivery speeds in three months. Nevertheless, it was well below the high of 58.6 reached twelve months earlier. The three other component series showed limited improvement with new orders, production and inventories remaining near the expansion lows.

Showing improvement was the export order index. Its rise to 51.0 provided the first indication of rising orders since April. The imports series fell sharply to 45.5, continuing to suggest declining volumes as it has for three straight months. The backlog of orders index fell to a new expansion low.

On the pricing front, the prices paid index eased to 33.5, a six year low. Four percent (NSA) of respondents reported paying higher prices while 37 percent paid less.

The figures from the Institute For Supply Management (ISM) are diffusion indexes. A reading above 50 represents growth in factory sector activity. They can be found in Haver's USECON database. The expectations number is in Haver's AS1REPNA database.

Monetary Policy, Financial Stability, and the Zero Lower Bound is the title of yesterday's speech by Fed Vice Chairman Stanley Fischer and is available here.

ISM Mfg (SA) Dec Nov Oct Dec '14 2015 2014 2013
Composite Index 48.2 48.6 50.1 55.1 51.4 55.7 53.8
 New Orders 49.2 48.9 52.9 57.8 52.7 59.0 56.9
 Production 49.8 49.2 52.9 57.7 53.5 59.2 57.5
 Employment 48.1 51.3 47.6 56.0 51.0 54.5 53.2
 Supplier Deliveries 50.3 50.6 50.4 58.6 50.7 55.0 51.9
 Inventories 43.5 43.0 46.5 45.5 49.0 50.8 49.4
Prices Paid Index (NSA) 33.5 35.5 39.0 38.5 39.8 55.6 53.8
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