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Economy in Brief

ISM Factory Sector Index & Prices Weaken
by Tom Moeller  May 1, 2017

The ISM composite index of factory sector activity during April fell to 54.8 from an unrevised 57.2 in March. It was the lowest level since December. A level of 56.5 had been expected in the Action Economics Forecast Survey.

A decline in the new orders reading to 57.5 from 64.8 led the overall index lower. It was weakest reading since November and down from the February high of 65.1. The supplier delivery index indicated quicker delivery speeds as it eased to 55.1. The production index offset these declines with a rise to 58.6 following its steep February drop. Inventories accumulated following decumulation during all of 2015 and 2016.

The employment index fell sharply to 52.0 from 58.9. It was the lowest level since December, though the index reading has remained above 50 for seven straight months, indicating a rising level of jobs. During the last ten years there has been an 85% correlation between the index level and the m/m change in factory sector payrolls.

The prices paid reading slipped to 68.5, but remained stronger versus the low of 33.5 in January 2016. Forty-four percent (NSA) of respondents reported paying high prices while seven percent paid less.

Amongst other detailed readings, the export order index rose to 59.5, up from the 2015 low of 46.5. The order backlog reading of 57.0 remained near its three-year high. The imports index rose to its highest level since January 2015.

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 can be found in Haver's AS1REPNA database.

ISM Mfg (SA) Apr Mar Feb Apr'16 2016 2015 2014
Composite Index 54.8 57.2 57.7 50.7 51.5 51.4 55.6
 New Orders 57.5 64.5 65.1 54.9 54.7 52.6 58.9
 Production 58.6 57.6 62.9 54.6 54.0 53.5 59.2
 Employment 52.0 58.9 54.2 49.2 49.7 51.0 54.4
 Supplier Deliveries 55.1 55.9 54.8 49.1 51.9 50.7 55.0
 Inventories 51.0 49.0 51.5 45.5 47.2 49.0 50.8
Prices Paid Index (NSA) 68.5 70.5 68.0 51.5 53.5 39.8 55.6
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