Economy

ISM PMI Reaches High of 57.1 in July

August 3, 2014

The July ISM Report on Business indicates that activity in the manufacturing sector increased last month. The July PMI rose 1.8 percent to 57.1 for the highest reading since April 2011 and the 14th consecutive monthly increase. A PMI reading in excess of 43.2 percent, over a period of time, also indicates an expansion of the overall economy. July’s reading was has exceeded that level for 62 consecutive months.

The indices for new orders increased 4.5 percent to 63.4 percent and production increased 1.2 percentage points to 61.2 percent. Inventories of raw materials decreased 4.5 percent to 48.5, a reading that is considered too low. The pricing index rose by 1.5 points to 59.5.

Employment levels grew for the thirteenth month, increasing 5.4 points to 58.2.

Imports and exports grew at a slower pace in July, dropping 1.5 points to 53.0 and 5.0 points to 52.0, respectively.

Respondents to the Institute for Supply Management survey had the following comments:

– “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)
– “Geopolitics still present a considerable risk as well as the European market.” (Chemical 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)
– “Russia’s demand for medical devices from the U.S. has dropped by 40 percent.” (Miscellaneous Manufacturing)