July ISM Manufacturing Increases to 57.1%, Up From June’s 55.3% (Update: June Construction Spending Dove)
Economic activity in the manufacturing sector expanded in July for the 14th consecutive month, and the overall economy grew for the 62nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
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 …
New Orders and Production would indicate stronger GDP in the quarters to come. But backlog stayed in contraction, thought just barely (49.5%).
Overall, it’s a very strong report. The mystery is why this strong sentiment survey (as well as the Non-Manuafacturing report, which will come out next Tuesday) isn’t correlating much with actually reported, hard-number production, spending and sales results.
Latest example: In the first indication that Wednesday’s GDP report may have overstated second-quarter growth, construction spending fell by 1.8% in June – its biggest drop since Jan 2011 (HT Zero Hedge) —
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2014 was estimated at a seasonally adjusted annual rate of $950.2 billion, 1.8 percent (±1.8%)* below the revised May estimate of $967.8 billion. The June figure is 5.5 percent (±2.3%) above the June 2013 estimate of $900.3 billion.
During the first 6 months of this year, construction spending amounted to $445.1 billion, 7.8 percent (±1.6%) above the $413.0 billion for the same period in 2013.