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Economy in Brief

ISM Factory Sector Index Strengthens to 13-Year High
by Tom Moeller  October 2, 2017

Factories were humming last month. The ISM manufacturing sector composite index jumped to 60.8 during September from August's unrevised reading of 58.8. It indicated the 13th strait month of increased factory sector activity, and the figure was at its highest level since May 2004. A level of 58.0 had been expected in the Action Economics Forecast Survey.

The new orders index increased to 64.6, the highest level in six months. As a result of this strengthening, the supplier delivery series surged to 64.4, indicating the slowest speeds of product delivery since July 2004. The production series ticked higher, but the inventories index fell following sharp increases since 2015.

The employment figure increased slightly to 60.3, indicating the twelfth straight month of payroll expansion. During the last ten years, there has been an 88% correlation between the index and the m/m change in factory sector employment. Twenty-four percent (NSA) of respondents reported higher employment while seven percent indicated a decline.

The prices paid index surged to 71.5, its highest level since May 2011. Forty-five percent (NSA) of respondents reported paying higher prices while two percent paid less.

The export order index rose slightly to 57.0, down from its June high but up sharply versus all of 2015. The import order index slipped and remained below its July high. The order backlog series improved and was up sharply from the 2015 low.

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) Sep Aug Jul Sep'16 2016 2015 2014
Composite Index 60.8 58.8 56.3 51.7 51.5 51.4 55.6
 New Orders 64.6 60.3 60.4 55.0 54.7 52.6 58.9
 Production 62.2 61.0 60.6 53.3 54.0 53.5 59.2
 Employment 60.3 59.9 55.2 50.0 49.7 51.0 54.4
 Supplier Deliveries 64.4 57.1 55.4 50.8 51.9 50.7 55.0
 Inventories 52.5 55.5 50.0 49.5 47.2 49.0 50.8
Prices Paid Index (NSA) 71.5 62.0 62.0 53.0 53.5 39.8 55.6
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