Economic activity in the manufacturing sector expanded in June for the 13th consecutive month, and the overall economy grew for the 61st consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
… “The June PMI® registered 55.3 percent, a decrease of 0.1 percentage point from May’s reading of 55.4 percent, indicating expansion in manufacturing for the 13th consecutive month. The New Orders Index registered 58.9 percent, an increase of 2 percentage points from the 56.9 percent reading in May, indicating growth in new orders for the 13th consecutive month. The Production Index registered 60 percent, 1 percentage point below the May reading of 61 percent. Employment grew for the 12th consecutive month, registering 52.8 percent, the same level of growth as reported in May. Inventories of raw materials remained at 53 percent, the same reading as reported in both May and April. The price of raw materials grew at a slower rate in June, registering 58 percent, down 2 percentage points from May.”
Of the 18 manufacturing industries, 15 are reporting growth …
The two GDP drivers in the narrative, New Orders and Production, were very strong. But the third, Order Backlog, went into contraction, falling from 52.5% to 48.0%. This may not bode well for the third quarter’s GDP.
This is good news, as in it certainly beats the alternative. But the disconnect between ISM’s Manufacturing Index — which we must remind everyone is survey, not a hard statistical indicator — and what from all appearances is going on in the economy as actually measured has never seemed so great.