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ISM Manufacturing Surges To 3 Year Highs, Construction Spending Plunges Most Since Jan 2011

Tyler Durden's picture


The numbers have been 'adjusted' and all is well in the world. Never mind Chicago PMI, or US PMI, the ISM Manufacturing index for July printed 57.1 - the highest since April 2011 - well above expectations and last month's 55.3. Employment rose notably (the opposite of US PMI) and inventories contracted. That's the great news. Then there's the meh news - consumer confidence slipped lower in July. Then there's the horrible news - construction spending collapsed at 1.8% MoM - its biggest drop since Jan 2011. Take your pick which will define your bias.

The Good news...

ISM at 3 year highs


*  *  *

The meh news...

UMich confidence rose modestly from its preliminary level to 81.8 but remains lower MoM...


*  *  *

The bad news...

Construction Spending collapsed...


And some more from the ISM:

First, the comments, which we assumes are based on the correct seasonal adjustment:

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 58.9 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 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.

Then, the breakdown. Note the plunge in inventories. Not good for an economy where 40% of "growth" is thanks to inventory accumulation:

Some of the more amusing respondents:

  • "Russia's demand for medical devices from the U.S. has dropped by 40 percent." (Miscellaneous Manufacturing)
  • "Geopolitics still present a considerable risk as well as the European market." (Chemical Products)
  • "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)
  • "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)

And while the following commodities are up in price:

  • Aluminum (6);
  • Benzene;
  • Copper;
  • Lumber (5);
  • Molybdenum;
  • Nickel (5);
  • Polypropylene;
  • Stainless Steel (5);
  • Steel (8).

... that chronic shortage of helium appears to finally be over: :Wood Pallets is the only commodity reported in short supply.:

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Fri, 08/01/2014 - 10:15 | 5032368 InsurgoCasca
InsurgoCasca's picture

Just more noise. C'mon Tyler, embrace the new economic order: no growth, higher prices, manipulated markets. What more can you ask for?!

Fri, 08/01/2014 - 10:18 | 5032394 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Please help, I forgot which is worse, more "noise" or "Unexpected Facts" ?

Fri, 08/01/2014 - 10:31 | 5032426 spastic_colon
spastic_colon's picture

tyler(s) or someone should make a chart of which report lags which and by how much, i'm too lazy to figure it out, maybe it would help make sense of the riggedness.

Fri, 08/01/2014 - 10:12 | 5032369 Bill of Rights
Bill of Rights's picture

Big falls in public spending which was -4.0% vs +1.6% in May and -2.9% vs a year ago. Private spending was-1.0% vs +0.4% prior, +9.2% y/y

Fri, 08/01/2014 - 10:14 | 5032379 Ban KKiller
Ban KKiller's picture

Belgium, oh Belgium, we hardly knew ye. 

Fri, 08/01/2014 - 10:15 | 5032381 NoDebt
NoDebt's picture

So.... we may safely resume buying stawks?

Fri, 08/01/2014 - 10:28 | 5032412 Dr. Engali
Dr. Engali's picture

It's a weekday ending in "y" so yes.....yes... buy stawks. I recommend CYNK, it's up 22% and it has plenty of room to run. The sky is the limit on this social networking ball of fire.

Fri, 08/01/2014 - 10:15 | 5032384 fonzannoon
fonzannoon's picture

lotta noise in all these numbers. Seems impossible to make any determination based on it all. This is why it's good that we have someone like Yellen in there. She is catching a lot of heat for not moving soon, but she sees that the picture is cloudy and there is no clear path. She knows it's best to leave rates low until we can get real clarity. It's good to know we have someone in charge that stays cool under pressure. The slow growth and low rate environment continues unabated. Now get the fuck in that SPY Grandma.

Fri, 08/01/2014 - 10:20 | 5032401 NoDebt
NoDebt's picture

I'm more accustomed to reading that with MDB's screen name above it.  

There's no way he'll take the bait a second time.  Nobody's that stupid.

Fri, 08/01/2014 - 10:25 | 5032411 fonzannoon
fonzannoon's picture

you sure?

Fri, 08/01/2014 - 10:29 | 5032422 Dr. Engali
Dr. Engali's picture

"Nobody's that stupid."


You obviously haven't been to a Walmart.

Fri, 08/01/2014 - 10:31 | 5032428 NoDebt
NoDebt's picture

I'm giving the benefit of the doubt.  Everyobody gets one mulligan.

Fri, 08/01/2014 - 10:18 | 5032393 Global Hunter
Global Hunter's picture

The lower the VIX goes the more volatile the economic indicators become?

Fri, 08/01/2014 - 10:28 | 5032419 Eyeroller
Eyeroller's picture

Of course!  That's how it works in Yellenville!

Fri, 08/01/2014 - 10:21 | 5032405 Peter Pan
Peter Pan's picture

Contradicting data is just an indication of how badly coordinated their lying is.

Fri, 08/01/2014 - 10:33 | 5032433 Eyeroller
Eyeroller's picture

This shows how desperate the lying is becoming.

If ALL the numbers are good, then the Fed must raise rates and bring on a correction/crash.

If ALL the numbers are bad, then the Fed keeps printing and blows the bubble even bigger.  But at this stage, if the numbers are still ALL bad then it's readily apparent to even the muppets that QE is not working.

The clowns at CNBC are calling all these economic reports GOLDILOCKS!  Not too bad, and not too good, therefore maintain status quo of slow tapering and ambiguous time frame for raising rates.  Bullish, or mildly bearish at worst.

Fri, 08/01/2014 - 12:53 | 5033377 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

Sideways Forward!

Fri, 08/01/2014 - 10:25 | 5032409 Kaiser Sousa
Kaiser Sousa's picture

its all bullshit...
change to channel zero...

Fri, 08/01/2014 - 10:35 | 5032438 GrinandBearit
GrinandBearit's picture


Perpetual liars.

Fri, 08/01/2014 - 10:46 | 5032493 orangegeek
orangegeek's picture

construction spending down?  philly housing index tanked too




and there's more downside ahead


there's no housing recovery - never has been - regional bounces and that's about it

Fri, 08/01/2014 - 10:50 | 5032508 enforcer92677
enforcer92677's picture

There was a shortage of Helium?  Huh.......

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