Economic activity in the manufacturing sector expanded in July for the 14th consecutive month, and the overall economy grew for the 62nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management®(ISM®)Manufacturing Business Survey Committee.
“The July PMI® registered 57.1 percent, an increase of 1.8 percentage points from June’s reading of 55.3 percent, indicating expansion in manufacturing for the 14th consecutive month. The New Orders Index registered 63.4 percent, an increase of 4.5 percentage points from the 58.9percent reading in June, indicating growth in new orders for the 14th consecutive month. The Production Index registered 61.2 percent, 1.2 percentage points above the June reading of 60 percent. Employment grew for the 13th consecutive month, registering 58.2 percent, an increase of 5.4 percentage points over the June reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, a decrease of 4.5 percentage points from the June reading of 53 percent, contracting after five months of consecutive growth. Comments from the panel are generally positive, while some indicate concern over global geopolitical situations.” Of the 18 manufacturing industries, 17 are reporting growth in July in the following order: Furniture & Related Products; Textile Mills; Apparel, Leather & Allied Products; Printing & Related Support Activities; Plastics & Rubber Products; Paper Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Machinery; Chemical Products; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Primary Metals; Transportation Equipment; and Computer & Electronic Products. The only industry reporting contraction in July is Wood Products.
WHAT RESPONDENTS ARE SAYING …
- “Status quo…sales are okay (not great). Costs are generally flat.” (Food, Beverage & Tobacco Products)
- “We see slow growth in business as we see a slow growing economy.” (Fabricated Metal Products)
- “Business is still very good and we are very optimistic for the rest of the year.” (Transportation Equipment)
- “Bookings down, but shipments strong.” (Electrical Equipment, Appliances & Components)
- “Overall business conditions still good in our industry.” (Computer & Electronic Products)
- “Geopolitics still present a considerable risk as well as the European market.” (Chemical Products)
- “Contractors are very busy. Difficult time getting many to bid, especially electrical.” (Paper Products)
- “Salaries for engineering labor continue to increase above general inflation due to market competition and shortages in certain specialty skills.” (Petroleum & Coal Products)
- “Economy shows many signs of strength.” (Machinery)
- “Russia’s demand for medical devices from the U.S. has dropped by 40 percent.” (Miscellaneous Manufacturing)
JULY 2014 MANUFACTURING INDEX SUMMARIES
PMI® Manufacturing expanded in July as the PMI® registered 57.1 percent, an increase of 1.8 percentage points when compared to June’s reading of 55.3 percent. July’s PMI reading of 57.1 is the highest reading since April 2011 when the PMI® registered 58.9 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI® in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI® indicates growth for the 62nd consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 14th consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economyindicates that the average PMI® for January through July (54.4 percent) corresponds to a 3.7 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for July (57.1 percent) is annualized, it corresponds to a 4.6 percent increase in real GDP annually.”
ISM®’s New Orders Index registered 63.4 percent in July, an increase of 4.5 percentage points when compared to the 58.9 percent reported in June, indicating growth in new orders for the 14th consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars). The 13 industries reporting growth in new orders in July — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Miscellaneous Manufacturing; Primary Metals; Machinery; Transportation Equipment; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The two industries reporting a decrease in new orders during July are: Wood Products; and Nonmetallic Mineral Products.