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
[5]
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The meh news...
UMich confidence rose modestly from its preliminary level to 81.8 but remains lower MoM...
[6]
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The bad news...
Construction Spending collapsed...
[7]
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.:
