ISM’s US Manufacturing PMI rises for third straight month

The Institute for Supply Management’s survey of manufacturing companies for July revealed economic activity in the manufacturing sector grew for a second straight month. The headline index rose by 1.6 to 54.2, driven by a surge in new orders and production. In June, the headline index registered 52.6, while in May it registered 43.1.

July’s Manufacturing PMI comfortably beat consensus expectations for 53.6, while offering some optimism considering last week’s disappointing initial jobless claims and durable goods reports.

New Orders

New orders continued to grow strongly, rising to 61.5 in July, which is the highest level recorded since 2018. The new orders index stood at 56.4 in June and 31.8 in May. Of the eleven (out of the eighteen) sectors reporting growth in new orders: wood products, furniture & related products and primary metals were, in order, the top three (in order) fastest growing sectors. Wood products has been among the top three for the past two months.

Production

Production also continued to see strong growth, rising to 62.1 in July, reaching its highest level recorded since 2018. The production index stood at 57.3 in June and 33.2 in May. Of the sixteen (out of eighteen) sectors reporting growth in production levels: primary metals, wood products and textile mills were the top three (in order) fastest growing sectors.

Employment

You could say, the only disappointment was the employment index. Despite rising to 44.3 in July, the employment index remained below 50 indicating headcount was falling in general. The employment index stood at 42.1 in June and 32.1 in May. There were only five sectors that reported rises in employment in July and these were: apparel, leather & Allied Products, printing & related support activities, furniture & related products.