ISM Manufacturing: 5th Consecutive Expansion

August 1, 2016
Bottom Line: Manufacturing activity declined slightly in July, more than expectations, but still expanded for the 5th consecutive time. The differential between new orders and inventory levels declined only slightly, suggesting manufacturing activity levels will continue to hold in expansionary territory (above 50 on headline ISM) over the coming months. Employment in the manufacturing sector fell. Prices paid, declined from 60.5% to 55.0% this month indicating a decline in the price of raw materials. Overall the report suggests modest manufacturing activity. The ISM Manufacturing Index FELL by 0.6 points in July to 52.6%, compared with market expectations for a small decline to a 53.0%. This indicates that manufacturing activity expanded modestly during the month. New Orders declined slightly from 57.0% to 56.9%. Meanwhile, Export Orders also declined slightly. Production grew slightly from 54.7% to 55.4%. Consequently, Order Backlogs declined for the 9th time in the last 12 months. Inventories grew slightly from 48.5% to 49.5%. Employment declined slightly from 50.4% to 49.4%, suggesting there will be weak factory job creation in next payroll employment report. Prices declined moderately.
Article by contingentmacro