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Economy in Brief

U.S. ISM Factory Index and Prices Improve
by Tom Moeller  March 1, 2016

The ISM Composite Index of factory sector activity rose to 49.5, the highest level since September. It indicated a decline in factory sector activity for the fifth straight month, but exceeded expectations for 48.5 in the Action Economics Forecast Survey. The data from the Institute for Supply Management (ISM) are diffusion indexes where a reading below 50 indicates decline.

Improvement in the production series to 52.8 from 50.2 led the overall increase, as it indicated a rising level of output for a second month. The employment figure increased as well to 48.5 from 45.9. As it remained below 50, however, it suggested a decline in payrolls for the fourth month in the last five. During the last ten years, there has been an 88% correlation between the index and the m/m change in factory sector payrolls. The inventory series also gained to 45.0, suggesting the slowest rate of decumulation since October.

Holding steady m/m at 51.5 was the new orders figure. It suggested a modestly higher level of bookings following two earlier months of decline. The supplier delivery series declined to 49.7, continuing the sideways move in place since early last year.

The prices paid series rose to 38.5, showing the slowest rate of price decline since October. Nine percent (NSA) of respondents reported higher prices while 32% indicated lower prices.

The new export orders index eased to 46.5, suggesting the quickest rate of orders decline since July 2012. The import index eased slightly, but overall order backlogs rose to 48.5, the highest level in nine months.

The figures from the Institute for Supply Management can be found in Haver's USECON database. The expectations number is in Haver's AS1REPNA database.

ISM Mfg (SA) Feb Jan Dec Feb '15 2015 2014 2013
Composite Index 49.5 48.2 48.0 53.3 51.3 55.6 53.8
 New Orders 51.5 51.5 48.8 53.8 52.6 58.9 56.8
 Production 52.8 50.2 49.9 54.7 53.5 59.2 57.5
 Employment 48.5 45.9 48.0 52.0 51.0 54.4 53.1
 Supplier Deliveries 49.7 50.0 49.8 53.7 50.7 55.0 51.9
 Inventories 45.0 43.5 43.5 52.5 49.0 50.8 49.4
Prices Paid Index (NSA) 38.5 33.5 33.5 35.0 39.8 55.6 53.8
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