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Economy in Brief

ISM Factory Sector Index Remains Steady
by Tom Moeller  June 1, 2017

The ISM factory sector composite index, at 54.9, was little changed last month from April's reading of 54.8. The figure has been trending higher since Q4'15. A level of 54.8 had been expected in the Action Economics Forecast Survey.

A rise in the new orders reading to 59.5 from 57.5 led the overall index higher. The figure remained down versus 65.1 three months ago. The inventories index also improved slightly to 51.5, showing the strongest rate of accumulation in nearly two years. Other component series weakened. The production index fell to 57.1, the lowest level in six months. The supplier delivery series declined to 53.1, indicating the quickest product delivery speeds since December.

The employment index increased to 53.5 from 52.0. The figure remained, nevertheless, close to the lowest since December. The index has reflected a rising level of jobs for eight straight months. During the last ten years, there has been an 85% correlation between the index level and the m/m change in factory sector payrolls. Twenty-three percent of respondents indicated rising payrolls while 12 percent reported a decline.

The prices paid reading declined to 60.5, but remained stronger versus the low of 33.5 in January 2016. Thirty percent (NSA) of respondents reported paying higher prices while nine percent paid less.

Amongst other detailed readings, the export order index fell to 57.5, but remained up from the 2015 low of 46.5. The order backlog reading of 55.0 was reduced moderately from its highs earlier this year, but remained up sharply from 2015 and 2016. The imports index also fell moderately.

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) May Apr Mar May'16 2016 2015 2014
Composite Index 54.9 54.8 57.2 51.0 51.5 51.4 55.6
 New Orders 59.5 57.5 64.5 54.9 54.7 52.6 58.9
 Production 57.1 58.6 57.6 52.7 54.0 53.5 59.2
 Employment 53.5 52.0 58.9 49.3 49.7 51.0 54.4
 Supplier Deliveries 53.1 55.1 55.9 53.3 51.9 50.7 55.0
 Inventories 51.5 51.0 49.0 45.0 47.2 49.0 50.8
Prices Paid Index (NSA) 60.5 68.5 70.5 63.5 53.5 39.8 55.6
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