August 1, 2014
New Orders, Employment and Production Growing; Inventories Growing; Supplier Deliveries Slowing
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, 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 58.9 percent 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 panels are generally positive, while some indicate concern over global geopolitical situations.”
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 economy indicates 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.”
Of the 18 manufacturing industries, 17 are reporting growth in July.
Source: Institute for Supply Management
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