July Manufacturing ISM Report On Business; PMI at 52.7%

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Economic activity in the manufacturing sector expanded in July for the 31st consecutive month, and the overall economy grew for the 74th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The July PMI® registered 52.7 percent, a decrease of 0.8 percentage point below the June reading of 53.5 percent. The New Orders Index registered 56.5 percent, an increase of 0.5 percentage point from the reading of 56 percent in June. The Production Index registered 56 percent, 2 percentage points above the June reading of 54 percent. The Employment Index registered 52.7 percent, 2.8 percentage points below the June reading of 55.5 percent, reflecting growing employment levels from June but at a slower rate. Inventories of raw materials registered 49.5 percent, a decrease of 3.5 percentage points from the June reading of 53 percent. The Prices Index registered 44 percent, down 5.5 percentage points from the June reading of 49.5 percent, indicating lower raw materials prices for the ninth consecutive month. Comments from the panel reflect a combination of optimism mixed with uncertainties about international markets and the impacts of the continuing decline in oil prices."

July 2015 Manufacturing Index Summaries

PMI

Manufacturing expanded in July as the PMI registered 52.7 percent, a decrease of 0.8 percentage point below the June reading of 53.5 percent, indicating growth in manufacturing for the 31st consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI® indicates growth for the 74th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 31st consecutive month. Holcomb stated, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through July (52.6 percent) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for July (52.7 percent) is annualized, it corresponds to a 3 percent increase in real GDP annually."

New Orders

ISM®'s New Orders Index registered 56.5 percent in July, an increase of 0.5 percentage point when compared to the June reading of 56 percent, indicating growth in new orders for the 32nd consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 10 industries reporting growth in new orders in July — listed in order — are: Textile Mills; Paper Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. The six industries reporting a decrease in new orders during July — listed in order —are: Wood Products; Primary Metals; Machinery; Plastics & Rubber Products; Computer & Electronic Products; and Transportation Equipment.

Production

ISM®'s Production Index registered 56 percent in July, which is an increase of 2 percentage points when compared to the 54 percent reported in June, indicating growth in production for the 35th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The eight industries reporting growth in production during the month of July — listed in order — are: Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Chemical Products; and Machinery. The five industries reporting a decrease in production during July are: Wood Products; Plastics & Rubber Products; Primary Metals; Transportation Equipment; and Computer & Electronic Products.

About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.