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Economy in Brief

ISM Manufacturing Index Improves
by Tom Moeller  December 1, 2016

Industrial sector activity is developing upward momentum. The ISM composite index of factory sector activity rose to 53.2 during November from an unrevised 51.9 in October. It was the highest level since June, and the eighth month this year when the index was above break-even. The latest figure compared to an expected 52.2 in the Action Economic Forecast Survey. During the last ten years, there has been a 75% correlation between the index level and the q/q change in real GDP.

Most component series improved last month. Production rose to the highest level since January 2015. The supplier delivery series surged, and indicated the slowest product delivery speeds since December 2014. The inventory index improved, showing a slowing rate of decumulation. New orders rose slightly. The employment index eased m/m but remained above the break-even level of 50. 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 prices paid index remained above 50 for the ninth straight month. It held m/m at 54.5, but was down from 63.5 in May. Twenty-one percent (NSA) of respondents reported paying higher prices while 12 percent paid less.

Amongst the other ISM series, the export index eased slightly to 52.0. It remained up, however, versus the February low of 46.5. The imports index declined to 50.5, but remained up from the low of 47.0 three months ago. The order backlog index increased to 49.0, little changed for five 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.

ISM Mfg (SA) Nov Oct Sep Nov'15 2015 2014 2013
Composite Index 53.2 51.9 51.5 48.4 51.3 55.6 53.8
 New Orders 53.0 52.1 55.1 49.0 52.6 58.9 56.8
 Production 56.0 54.6 52.8 49.8 53.5 59.2 57.5
 Employment 52.3 52.9 49.7 50.8 51.0 54.4 53.1
 Supplier Deliveries 55.7 52.2 50.3 49.6 50.7 55.0 51.9
 Inventories 49.0 47.5 49.5 43.0 49.0 50.8 49.4
Prices Paid Index (NSA) 54.5 54.5 53.0 35.5 39.8 55.6 53.8
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