July Manufacturing ISM Report on Business: PMI at 51.2%
August 1, 2019 | PRNewswireEstimated reading time: 3 minutes
Economic activity in the manufacturing sector expanded in July, and the overall economy grew for the 123rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
July 2019 Manufacturing Index Summaries
PMI
Manufacturing expanded in July, as the PMI registered 51.2%, a decrease of 0.5 percentage point from the June reading of 51.7%. This is the lowest reading since August 2016, when the index registered 49.6%. "This indicates growth in manufacturing for the 35th consecutive month. The PMI® continued a period of expansion softening, with four straight months of expansion decline. Softening this month was primarily due to slower growth in demand and consumption, indicated by the New Orders, Production and Employment indexes. Four of the six big industries expanded, as was the case in June, but at lower levels," says Fiore. A reading above 50%indicates that the manufacturing economy is generally expanding; below 50%indicates that it is generally contracting.
A PMI above 42.9%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI® indicates growth for the 123rd consecutive month in the overall economy and the 35th straight month of growth in the manufacturing sector. "The past relationship between the PMI and the overall economy indicates that the PMI for July (51.2%) corresponds to a 2.5% increase in real gross domestic product (GDP) on an annualized basis," says Fiore.
New Orders
ISM's New Orders Index registered 50.8%in July, an increase of 0.8 percentage point when compared to the 50% reported for June. This indicates that new orders grew after being unchanged for one month. "Customer demand expanded slightly in July following one month of no expansion. Three of the top six industry sectors expanded, and three contracted during the period," says Fiore. A New Orders Index above 52.5%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
Production
ISM's Production Index registered 50.8%in July, which is a decrease of 3.3 percentage points when compared to the 54.1%reported for June, indicating growth in production for the 35th consecutive month. "Production expansion continued in July, at a weaker pace compared to June. For the second straight month, production output was able to improve customer-inventory positions and reduce backlog orders," says Fiore. An index above 51.7%, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.
Employment
ISM's Employment Index registered 51.7% in July, a decrease of 2.8 percentage points when compared to the June reading of 54.5%. This indicates growth in employment in July for the 34th consecutive month. "Employment continued to expand slightly compared to June. Comments were generally 'pro hire,' but there is a growing reluctance to replace unplanned exits and retirements," says Fiore. An Employment Index above 50.8%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations slowed in July, as the Supplier Deliveries Index registered 53.3%. This is 2.6 percentage points higher than the 50.7%reported for June. "This is the 41st straight month of slowing supplier deliveries, in contrast with the reduction in production material lead times noted in the Buying Policy section of this report," says Fiore. A reading below 50% indicates faster deliveries, while a reading above 50% indicates slower deliveries.
Inventories
The Inventories Index registered 49.5% in July, an increase of 0.4 percentage point from the 49.1% reported for June. "The index contracted for the second straight month. Inventories were again depleted relative to production, due to production-output strength. Many respondents noted that they continue to watch inventories closely to align with softening demand," says Fiore. An Inventories Index greater than 44.3%, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
About Institute for Supply Management
Institute for Supply Management (ISM) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the ISM Mastery Model. This report has been issued by the association since 1931, except for a four-year interruption during World War II.
Suggested Items
U.S. Companies Invest Heavily in Robots
04/30/2024 | IFRManufacturing companies in the United States have invested heavily in more automation: total installations of industrial robots rose by 12% and reached 44,303 units in 2023. Number one adopter is the car industry followed by the electrical and electronics sector.
Flex Receives Ericsson 2023 Supplier Sustainability Award
04/30/2024 | FlexEricsson recently awarded Flex with its 2023 Supplier Sustainability Award — the second time since 2021. The award recognizes the extended supply chain benefits from sustainable manufacturing operations in the Flex facility in Tczew, Poland, that runs on 100 percent renewable energy.
USPAE to Springboard U.S. Technology Forward
04/30/2024 | Marcy LaRont, PCB007 MagazineThe U.S. Partnership for Assured Electronics (USPAE) was launched as a nonprofit subsidiary of IPC in 2020, specifically to manage the DoD relationship and access to funding, and to develop a cooperative facility to develop UHDI capabilities in the U.S., not only for the defense sector, but for the whole of the U.S. electronics industry. It is a tall order, but industry veteran Joe O'Neil believes it will happen. Having been tasked with making the UHDI Capable Cooperative Production Facility (UCCPF) a reality, he provides an update on this important project for U.S. electronics manufacturing.
Real Time with… IPC APEX EXPO 2024: Insight into Summit Interconnect's Success
04/30/2024 | Real Time with...IPC APEX EXPOShane Whiteside, CEO of Summit Interconnect, discusses the company's recent recognition as one of the best PCB fabricators in the industry by receiving IPC's Peter Sarmanian award. Whiteside touches on the impact of changes in the marketplace, such as the Defense Production Act and presidential determination, on their growth. Whiteside also shares the company's focus on mechanical and data automation to enhance manufacturing processes and anticipates more automation and evolution in the industry.
Latest Test and Inspection Solutions from GOEPEL electronic at SMTconnect 2024
04/29/2024 | GOEPEL electronicGOEPEL electronic will be demonstrating automated test and inspection equipment at SMTconnect, taking place in Nuremberg from June 11 to 13, 2024.