Global| Jun 03 2019ISM Manufacturing Index Falls but Prices Increase
by:Tom Moeller
|in:Economy in Brief
Summary
The ISM manufacturing index unexpectedly declined to 52.1 during May from 52.8 in April. It was the lowest level since October 2016 and remained below the expansion peak of 60.8 last August. The Action Economics Forecast Survey [...]
The ISM manufacturing index unexpectedly declined to 52.1 during May from 52.8 in April. It was the lowest level since October 2016 and remained below the expansion peak of 60.8 last August. The Action Economics Forecast Survey anticipated a reading of 53.0. Since 2008, there has been a 73% correlation between the index level and quarterly growth in real GDP.
Performance amongst the ISM index components was mixed last month. The supplier delivery series fell to 52.0 from 54.6 and indicated the quickest product delivery speeds since October 2016. The inventories index declined to 50.9 from 52.9, but has been fairly stable since early last year. The production series fell one point to 51.3. That was below the January 2018 high of 65.5 and was the lowest level since August 2016. Offsetting these declines was a rise in the new orders index to 52.7 from 51.7. The reading remained, however, below the December 2017 peak of 67.3.
Also inching higher was the employment figure to 53.7 from 52.4. Nevertheless, it still was the lowest level since April 2017. A higher 23% (NSA) of respondents reported higher payrolls while a higher 13% reported a decline. Since 2008, there has been an 84% correlation between the employment index and the m/m change in factory sector payrolls.
The prices paid series, which is not part of the composite series, improved to 53.2, but remained below the high of 79.5 in May of last year. A slightly higher 22% of respondents reported increased prices while lower prices were reported by a lessened 16%.
Amongst other series in the ISM survey, the export index rose modestly to 51.0, but remained significantly below February 2018 high of 62.8. The order backlog measure dropped sharply to a three-year low.
The ISM figures are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. Commodity prices can be found in USECON as well as the CMDTY database. The expectations number is available in Haver's AS1REPNA database.
| ISM Mfg (SA) | May | Apr | Mar | May'18 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Headline Index | 52.1 | 52.8 | 55.3 | 58.7 | 58.8 | 57.4 | 51.3 |
| New Orders | 52.7 | 51.7 | 57.4 | 62.9 | 61.4 | 62.2 | 54.5 |
| Production | 51.3 | 52.3 | 55.8 | 61.5 | 60.7 | 60.9 | 53.8 |
| Employment | 53.7 | 52.4 | 57.5 | 56.7 | 56.9 | 56.8 | 49.1 |
| Supplier Deliveries | 52.0 | 54.6 | 54.2 | 62.1 | 62.0 | 56.8 | 51.8 |
| Inventories | 50.9 | 52.9 | 51.8 | 50.2 | 52.9 | 50.4 | 47.5 |
| Prices Paid Index (NSA) | 53.2 | 50.0 | 54.3 | 79.5 | 71.7 | 65.0 | 53.1 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
