The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for July, and the story told is another positive one with the PMI at 56.3%, a decrease of 1.5 percentage points from the June reading of 57.2%.
Despite the decrease, a reading above 50% indicates the manufacturing economy is generally expanding; below 50% indicates it is generally contracting.
A PMI above 50%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI indicates growth for the 98th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 11th consecutive month.
According to Timothy R. Fiore, chairman of the ISM Manufacturing Business Survey Committee, “Comments from the panel generally reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in July compared to June, as well as supplier deliveries slowing (improving) and inventories unchanged during the period.”
The New Orders Index registered 60.4%, a decrease of 3.1 percentage points from the June reading of 63.5%. The Production Index registered 60.6%, a 1.8 percentage point decrease compared to the June reading of 62.4%. The Employment Index registered 55.2%, a decrease of 2 percentage points from the June reading of 57.2%. The Supplier Deliveries Index registered 55.4%, a 1.6 percentage point decrease from the June reading of 57%. The Inventories Index registered 50%, an increase of 1 percentage point from the June reading of 49%. The Prices Index registered 62% in July, an increase of 7 percentage points from the June reading of 55%, indicating higher raw materials prices for the 17th consecutive month, with a faster rate of increase in July compared with June.
Of the 18 manufacturing industries, 15 reported growth in July in the following order: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Wood Products; Fabricated Metal Products; Machinery; Chemical Products; Paper Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Computer & Electronic Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Primary Metals; and Transportation Equipment.
Three industries reported contraction in July compared to June: Apparel, Leather & Allied Products; Textile Mills; and Petroleum & Coal Product.
Further commentary and the full report are available at this link.