U.S. ISM Manufacturing Index Eases as Prices Surge
by:Tom Moeller
|in:Economy in Brief
Summary
- Index suggests modest slowdown.
- New orders, production & employment readings weaken.
- Prices index jumps to highest level in three years.
The ISM Purchasing Managers Index of activity in the manufacturing sector declined to 50.3 during February after rising to 50.9 in January. It remained up from a low of 46.9 in October of last year. A level of 50.4 had been expected by the Action Economics Forecast Survey. The series reached a monthly high of 63.8 in March 2021.
Performance amongst the component indexes remained mixed last month. The new orders index slumped to 48.6 from 55.1 in January. It was the lowest level in four months. A greatly lessened 20.3% (NSA) of respondents reported higher orders while a fewer 17.3% indicated declines. The February production index fell to 50.7 after surging to 52.5 in January. A lessened 16.5% (NSA) of respondents reported higher production while a reduced 14.6% reported lower. The employment index fell to 47.6 from 50.3, which was the first reading above break-even since May. A roughly steady 12.0% (NSA) of respondents reported more hiring while a higher 17.1% indicated less. Working higher, the inventories reading strengthened to 49.9 last month from 45.9 in January. A higher 14.6% (NSA) of respondents reported higher inventories while a greatly lessened 13.0% reported lower. The supplier delivery index surged to 54.5, its highest level since August 2022. A higher 14.9% (NSA) of respondents reported slower delivery speeds while a steady 6.0% reported a quickening.
The prices index, which is not part of the composite series, surged to 62.4 (NSA) in February after increasing to 54.9 in January. It was the highest level since June 2022, up from a September low of 48.3. A greatly increased 31.4% of respondents reported higher prices last month while a lessened 6.7% reported lower prices.
In other series, the export orders index fell to 51.4 in February from 52.4 in January. These readings remained above a low 45.2 in January of last year. The imports index rose 52.6, an eleven-month high, from 51.1 in January, while the order backlog index rose to 46.8 (NSA) last month from 44.9 in January.
The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver’s AS1REPNA database.
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.
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