Economy
IHS Markit: PMI of 63.4 Shows Healthy Manufacturing Sector
Written by David Schollaert
August 3, 2021
The U.S. manufacturing sector saw the most substantial improvement in operating conditions on record, according to July’s U.S. Manufacturing PMI data from IHS Markit.
“July saw manufacturers and their suppliers once again struggle to meet booming demand, leading to a further record jump in both raw material and finished goods prices,” said Chris Williamson, chief business economist at IHS Markit. “Despite reporting another surge in production, supported by rising payroll numbers, output continued to lag well behind order book growth to one of the greatest extents in the survey’s 14-year history, leading to a near-record build-up of uncompleted orders.”
Despite supplier shortages, output expectations remained upbeat amid hopes of further boosts to client demand over the coming year. The seasonally adjusted IHS Markit PMI posted a 63.4 in July, up from 62.1 in June and slightly higher than the earlier released “flash” estimate of 63.1 (a reading above 50.0 indicates growth). The improvement in the health of the manufacturing sector was the strongest in the 14-year history of the series.
Overall growth was supported by stronger expansions in output and new orders, with the latter increasing at the second-fastest pace since data collection began in May 2007, said Williamson. “The result is perhaps the strongest sellers’ market that we’ve seen since the survey began in 2007, with suppliers hiking prices for inputs into factories at the steepest rate yet recorded and manufacturers able to raise their selling prices to an unprecedented extent, as both suppliers and producers often encounter little price resistance from customers.”
Unparalleled supplier shortages and delays continued to exert upward pressure on input costs and stymie firms’ ability to process incoming new work. Cost burdens rose at a record-breaking rate, as a result, and the accumulation of backlogs accelerated, added Williamson. “Capacity is being constrained by yet another unprecedented lengthening of supply chains, with delivery delays reported far more widely in the past two months than at any time prior in the survey’s history. Manufacturers and their customers are consequently striving to maintain adequate inventory levels, often reporting the building of safety stocks where supply permits, to help keep production lines running and satisfy surging sales.”
David Schollaert
Read more from David SchollaertLatest in Economy
New York state manufacturing falls back into contraction
After a brief pickup in September, manufacturing activity in New York state retreated into contraction, according to the October Empire State Manufacturing Survey.
Dodge Momentum drops on moderating data center growth
Slowing growth in data center planning caused the Dodge Momentum Index (DMI) to pull back in September. The decline followed five months of growth after the index hit a two-year low in March.
US construction spending drops again in August
Construction spending in the US declined for a third month in August but showed an increase year over year (y/y). The US Census Bureau estimated construction spending to be $2.131 trillion in August on a seasonally adjusted annual rate (SAAR). While this was 0.1% below July’s revised spending rate, it was 4.1% higher than spending […]
ISM: Manufacturing contracts again in September
US manufacturing activity contracted for the sixth consecutive month in September, according to the latest report from the Institute for Supply Management (ISM). The index has indicated a contracting industrial sector for 22 of the past 23 months.
Chicago Business Barometer remains gloomy in September
The Chicago Business Barometer increased marginally in September but continues to indicate deteriorating business conditions.