ISM Manufacturing Comes At 55.5, Lowest Since December 2009, Better Than Expectations

Tyler Durden's picture

The PMI came in at 55.5, a smidge better than expectations of 54.5, yet worse than June's 56.2, and the lowest since December 2009, yet expectations set by a roundtable of Ph.D.'s are all that matters. Among the various indices, New Orders came in at 53.5 versus 58.5, the lowest since Junr 2009, while both Employment and Prices Paid came in better than before at 58.6 and 57.5 respectively. Deterioration was also spotted in Production, Backlog of Orders, and Imports. Yet this seemingly "better than expected" report was overshadowed by the sampling of negative responses:"Business in July was strong, the best month since October 2008." [don't tell this to Arcelor-Mittal] (Fabricated Metal Products), "Slow economy has killed sales for new equipment orders." (Machinery),"Quoting activity and sales are slow, and backlog is dropping." (Computer & Electronic Products),"Business continues to be sluggish and has fallen slightly as the economic ills continue." (Nonmetallic Mineral Products),"Retailers are still unwilling to gamble on inventory." (Printing & Related Support Activities).

Full press release:

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in July for the 12th consecutive month, and the overall economy grew for the 15th 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, CPSM, C.P.M., chair
of the Institute for Supply Management™ Manufacturing Business Survey
Committee. "Manufacturing continued to grow during July, but at a
slightly slower rate than in June. Employment, supplier deliveries and
inventories improved during the month and reduced the impact of a
month-over-month deceleration in new orders and production. July marks
12 consecutive months of growth in manufacturing, and indications are
that demand is still quite strong in 10 of 18 industries. The prices
that manufacturers paid for their inputs were slightly higher but
stable, with only a few items on the short supply list."

PERFORMANCE BY INDUSTRY

Ten of the 18 manufacturing industries are reporting growth in July,
in the following order: Plastics & Rubber Products; Miscellaneous
Manufacturing; Paper Products; Electrical Equipment, Appliances &
Components; Transportation Equipment; Primary Metals; Textile Mills;
Computer & Electronic Products; Fabricated Metal Products; and
Chemical Products. The four industries reporting contraction in July
are: Nonmetallic Mineral Products; Furniture & Related Products;
Food, Beverage & Tobacco Products; and Machinery.

WHAT RESPONDENTS ARE SAYING...
  • "Business in July was strong, the best month since October 2008." (Fabricated Metal Products)
  • "Slow economy has killed sales for new equipment orders." (Machinery)
  • "Quoting activity and sales are slow, and backlog is dropping." (Computer & Electronic Products)
  • "Business continues to be sluggish and has fallen slightly as the economic ills continue." (Nonmetallic Mineral Products)
  • "Retailers are still unwilling to gamble on inventory." (Printing & Related Support Activities)
MANUFACTURING AT A GLANCE
JULY 2010

Index

Series
Index
July
Series
Index
June
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI 55.5 56.2 -0.7 Growing Slower 12
New Orders 53.5 58.5 -5.0 Growing Slower 13
Production 57.0 61.4 -4.4 Growing Slower 14
Employment 58.6 57.8 +0.8 Growing Faster 8
Supplier Deliveries 58.3 57.3 +1.0 Slowing Faster 14
Inventories 50.2 45.8 +4.4 Growing From Contracting 1
Customers' Inventories 39.0 38.0 +1.0 Too Low Slower 16
Prices 57.5 57.0 +0.5 Increasing Faster 13
Backlog of Orders 54.5 57.0 -2.5 Growing Slower 7
Exports 56.5 56.0 +0.5 Growing Faster 13
Imports 52.5 56.5 -4.0 Growing Slower 11
             
OVERALL ECONOMY Growing Slower 15
Manufacturing Sector Growing Slower 12

*Number of months moving in current direction

 

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Capacitors; Corrugated Containers (5); Paper; Pulp; Steel* (13); and Titanium.

Commodities Down in Price

Machined Steel Parts; Polyethylene, Polypropylene Resins (2); and Steel*.

Commodities in Short Supply

Capacitors; Electrical Components; and Titanium Dioxide.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.