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Economy in Brief

ISM Manufacturing Index Slips; Prices Paid Index Declines
by Tom Moeller  August 1, 2016

The ISM Composite Index of manufacturing activity eased to 52.6 during July from an unrevised 53.2 in June. A reading of 53.0 had been expected in the Action Economics Forecast Survey. The decline left the average for the first seven months this year at 51.1, little changed from 51.3 averaged in 2015. During the last ten years, there has been a 75% correlation between the index level and the q/q change in real GDP.

The supplier delivery index posted the largest decline amongst the component series. Its fall to 51.8 indicated the quickest product delivery speeds in three months. Also moving lower was the employment index to 49.4, though that remained up from the 45.9 low six months ago. During the last ten years, there has been an 88% correlation between the index level and the m/m change in factory sector payrolls. The new orders index was little changed at 56.9, but remained improved versus the below-50 readings at the end of last year. To the upside, the production index rose to 55.4, its highest level since January of last year. The improved inventory reading of 49.5 was the highest figure in 12 months.

The separate prices paid figure fell to 55.0, down for the second straight month from the recent high of 63.5. Twenty-two percent (NSA) of respondents reported paying higher prices while 12 percent paid less.

Amongst the other ISM series, the export index fell to 52.5 from 53.5. It remained up, nevertheless, from the February low of 46.5. The imports index was stable at 52.0, also up from the December low of 45.5. The order backlog index fell to 48.0, its lowest reading in six months.

The ISM figures are diffusion indexes where a reading above 50 indicates increase. 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.

Which Households Have Negative Wealth? from the Federal Reserve Bank of New York is available here.

ISM Mfg (SA) Jul Jun May Jul '15 2015 2014 2013
Composite Index 52.6 53.2 51.3 51.9 51.3 55.6 53.8
 New Orders 56.9 57.0 55.7 53.6 52.6 58.9 56.8
 Production 55.4 54.7 52.6 55.0 53.5 59.2 57.5
 Employment 49.4 50.4 49.2 51.9 51.0 54.4 53.1
 Supplier Deliveries 51.8 55.4 54.1 49.3 50.7 55.0 51.9
 Inventories 49.5 48.5 45.0 49.5 49.0 50.8 49.4
Prices Paid Index (NSA) 55.0 60.5 63.5 44.0 39.8 55.6 53.8
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