PMI shows continued expansion in U.S. manufacturing sector

by Talk Business & Politics staff ( 125 views 

The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for July, and the story told is another positive one though slightly off from the previous month.

ISM registered a 58.1% on the PMI, down from June’s reading of 60.2% but well above the reading of 50% that 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 111th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 23rd consecutive month.

“Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60% or above for the 15th straight month, and the Customers’ Inventories Index remaining low,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. “The Backlog of Orders Index continued to expand, but at lower levels. Production and employment continues to expand in spite of labor and material shortages. Inputs — expressed as supplier deliveries, inventories and imports — had expansion increases, due primarily to negative supply chain issues, but at easing levels compared to the prior month. Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders expanded, but at lower levels. Price pressure remains strong, but the index softened for the second straight month. Demand remains robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are again overwhelmingly concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their business.”

The New Orders Index registered 60.2%, a decrease of 3.3 percentage points from the June reading of 63.5%. The Production Index registered 58.5%, a 3.8 percentage point decrease compared to the June reading of 62.3%. The Employment Index registered 56.5%, an increase of 0.5 percentage point from the June reading of 56%.

The Supplier Deliveries Index registered 62.1%, a 6.1 percentage point decrease from the June reading of 68.2%. The Inventories Index registered 53.3%, an increase of 2.5 percentage points from the June reading of 50.8%. The Prices Index registered 73.2% in July, a 3.6 percentage point decrease from the June reading of 76.8%, indicating higher raw materials prices for the 29th consecutive month.

Of the 18 manufacturing industries, 17 reported growth in July, in the following order: Textile Mills; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Computer & Electronic Products; Petroleum & Coal Products; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Miscellaneous Manufacturing; Fabricated Metal Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Chemical Products; Wood Products; and Transportation Equipment. The only industry reporting a decrease in July is Primary Metals.