July Manufacturing ISM Report On Business: New Orders, Production Growing
Press release from the issuing company
Supplier Deliveries Slowing
Employment, Inventories Decline
Exports, Imports Growing
(Tempe, Arizona) — Economic activity in the manufacturing sector grew for the sixth consecutive month in July. The overall economy grew for the ninth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "For manufacturing, July was only slightly better than June. The PMI declined, but still indicated growth as 12 industries reported improvement in July. The decline in the PMI was primarily driven by a weak showing in July's new orders, which may be due to a pause in inventory replenishment."
ISM's Backlog of Orders Index indicates that order backlogs declined after five consecutive months of growth. ISM's Supplier Deliveries Index reflects slower deliveries for the seventh consecutive month. Manufacturing employment continued to decline in July as the index remained below the breakeven point (an index of 50 percent) for the 22nd consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the fifth consecutive month. New Export Orders grew in July for the seventh consecutive month. July's Imports Index decelerated, while still registering growth for the eighth consecutive month.
Comments from purchasing and supply executives reflect a wide range of concerns. Some indicate that business is improving, but question whether it will continue. Others are experiencing declines and question if we have hit the bottom. Issues related to energy costs seem to have abated while the 201 steel tariffs are seemingly presenting problems to a number of industries – steel fabricators in particular.
ISM's PMI is 50.5 percent in July, a decrease of 5.7 percentage points when compared to 56.2 percent reported in June. ISM's New Orders Index declined from 60.8 percent in June to 50.4 percent in July. ISM's Production Index declined 5.7 percentage points from 61.4 percent in June to 55.7 percent in July. The ISM Employment Index is at 45 percent for July, a decrease of 4.7 percentage points when compared to the 49.7 percent reported in June.
ISM's Supplier Deliveries Index registered 54.9 percent, compared to 55.2 percent in June. ISM's Inventories Index declined to 41.8 percent. ISM's Customers' Inventories Index for July is at 42.5 percent, a decrease of 2 percentage points when compared to June's 44.5 percent. ISM's Prices Index in July is 68.3 percent, an increase of 2.8 percentage points from June's 65.5 percent. ISM's Backlog of Orders Index declined 8 percentage points from 53.5 percent in June to 45.5 percent in July.
ISM's New Export Orders Index registered 52.2 percent, down 2.3 percentage points from June's 54.5 percent. The rate of growth in imports slowed somewhat, as the Imports Index declined from 55.1 percent in June to 54.2 percent in July.
"The growth in manufacturing activity decelerated during July," added Ore. "Steel price increases are drawing a lot of attention from supply managers and, while energy prices have moderated, they are still a concern. Textiles, Primary Metals, Furniture, and Transportation & Equipment report a strong upswing in hiring during July."
Of the 20 industries in the manufacturing sector, 12 industries reported growth: Apparel; Textiles; Tobacco; Rubber & Plastic Products; Transportation & Equipment; Chemicals; Food; Primary Metals; Printing & Publishing; Instruments & Photographic Equipment; Wood & Wood Products; and Furniture.
"Steel, Steel – Coated, Steel – Cold Rolled, Steel – Flat Rolled, and Steel – Galvanized are the commodities reported in short supply. Commodities reported up in price are: Aluminum, Caustic Soda, Chemicals, Chlorine, Copper, Corn, Corrugated Containers, Flour, Plastics, Polyethylene, Polyethylene – High Density, Polypropylene, Resins, Soybeans, Steel, Steel – Coated, Steel – Flat Rolled, Steel – Galvanized, Steel – Hot Rolled, Steel – Stainless, Steel Products, and Wheat. The only commodity reported down in price is Natural Gas," Ore stated.
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