PERFORMANCE BY INDUSTRY
Of the 18 manufacturing industries, 10 are reporting growth in July, in the following order: Paper Products; Furniture & Related Products; Computer & Electronic Products; Transportation Equipment; Wood Products; Petroleum & Coal Products; Printing & Related Support Activities; Primary Metals; Fabricated Metal Products; and Nonmetallic Mineral Products. The seven industries reporting contraction in July — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; and Chemical Products.
WHAT RESPONDENTS ARE SAYING …
- “Inflation pressures have finally slowed down.” (Chemical Products)
- “With products sold internationally, the business conditions we are currently experiencing are declining from abnormally [high] record-breaking levels. Business conditions are currently flattening to more normal volumes, while trending slightly downward.” (Machinery)
- “Market conditions — Europe weak, U.S. soft, Asia strong.” (Computer & Electronic Products)
- “Demand from automotive manufacturers continues to improve.” (Fabricated Metal Products)
- “Export sales very strong, while domestic sales are sluggish.” (Paper Products)
- “The looming debt ceiling has government agencies backing away from spending. Forecasting a slowdown in demand in the short term.” (Transportation Equipment)
- “Generally seeing a slowdown, which is typical this time of year. Hopeful that this is seasonal only.” (Plastics & Rubber Products)
- “Most industrial customers seem to be sustaining their business. Export orders continue to remain strong. Price pressures persist, especially with commodity materials.” (Chemical Products)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum (11); Brass; Copper (12); Copper Based Products (9); Electric/Electronic Components; Metal Parts; Plastic Products (7); Polyethylene(b) (2); Rubber Products (6); Steel(b) (11); Steel Products (8); and Titanium Dioxide (4).
Commodities Down in Price
Corn; Diesel Fuel; Ethylene; Gasoline; HDPE; LDPE; Polyethylene(b); Polypropylene; Soybean Oil; Steel(b) (3); and Wheat.
Commodities in Short Supply
Butadiene; and Electric/Electronic Components (7).
Note: The number of consecutive months the commodity is listed is indicated after each item.
(b) Reported as both up and down in price.
JULY 2011 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing continued its growth in July as the PMI registered 50.9 percent, a decrease of 4.4 percentage points when compared to June’s reading of 55.3 percent. The PMI registered the lowest reading since July 2009, when it registered 49 percent. 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 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 26th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 24th consecutive month. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (57.6 percent) corresponds to a 5.3 percent increase in real gross domestic product (GDP). In addition, if the PMI for July (50.9 percent) is annualized, it corresponds to a 2.9 percent increase in real GDP annually.”
New Orders
ISM’s New Orders Index registered 49.2 percent in July, which is a decrease of 2.4 percentage points when compared to the 51.6 percent reported in June. This is the first month of contraction in the New Orders Index since June of 2009, when it registered 48.9 percent. 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 nine industries reporting growth in new orders in July — listed in order — are: Petroleum & Coal Products; Wood Products; Paper Products; Furniture & Related Products; Transportation Equipment; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The seven industries reporting decreases in new orders in July — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Machinery.
Production
ISM’s Production Index registered 52.3 percent in July, which is a decrease of 2.2 percentage points when compared to the June reading of 54.5 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the 26th consecutive month the Production Index has registered above 50 percent.
The seven industries reporting growth in production during the month of July — listed in order — are: Printing & Related Support Activities; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Paper Products; Fabricated Metal Products; and Transportation Equipment. The seven industries reporting a decrease in production in July — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Nonmetallic Mineral Products; Machinery; Chemical Products; and Electrical Equipment, Appliances & Components.
Employment
ISM’s Employment Index registered 53.5 percent in July, which is 6.4 percentage points lower than the 59.9 percent reported in June. While this month represents the 22nd consecutive month of growth in manufacturing employment, the July reading is also the lowest reading since December 2009, when the index registered 53.2 percent. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Of the 18 manufacturing industries, nine reported growth in employment in July in the following order: Computer & Electronic Products; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Machinery; and Chemical Products. The five industries reporting a decrease in employment in July are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Plastics & Rubber Products; and Food, Beverage & Tobacco Products.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in July as the Supplier Deliveries Index registered 50.4 percent, which is 5.9 percentage points lower than the 56.3 percent registered in June. This is the 26th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.
The nine industries reporting slower supplier deliveries in July — listed in order — are: Petroleum & Coal Products; Furniture & Related Products; Miscellaneous Manufacturing; Primary Metals; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Chemical Products; and Computer & Electronic Products. The only industry reporting faster deliveries in July is Fabricated Metal Products. Eight industries reported no change in supplier deliveries in July compared to June.
Inventories
The Inventories Index registered 49.3 percent in July, 4.8 percentage points lower than the 54.1 percent reported in June. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis’ (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
The four industries reporting higher inventories in July are: Nonmetallic Mineral Products; Computer & Electronic Products; Machinery; and Transportation Equipment. The nine industries reporting decreases in inventories in July — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Textile Mills; Printing & Related Support Activities; Fabricated Metal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Chemical Products. Five industries reported no change in inventories in July compared to June.
Customers’ Inventories(c)
The ISM Customers’ Inventories Index registered 44 percent in July, 3 percentage points lower than in June when the index registered 47 percent. This is the 28th consecutive month the Customers’ Inventories Index has been below 50 percent, indicating that respondents believe their customers’ inventories are too low at this time.
The two manufacturing industries reporting customers’ inventories as being too high during July are: Apparel, Leather & Allied Products; and Fabricated Metal Products. The 10 industries reporting customers’ inventories as too low during July — listed in order — are: Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Printing & Related Support Activities; Paper Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Chemical Products. Six industries reported no change in customers’ inventories for the month of July compared to June.
Prices(c)
The ISM Prices Index registered 59 percent in July, 9 percentage points lower than the 68 percent reported in June. This is the third consecutive month the Prices Index has registered below 80 percent since December 2010, and is the 25th consecutive month the index has registered above 50 percent. While 35 percent of respondents reported paying higher prices and 17 percent reported paying lower prices, 48 percent of supply executives reported paying the same prices as in June. A Prices Index above 49.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
Of the 18 manufacturing industries, 10 report paying increased prices during the month of July, in the following order: Nonmetallic Mineral Products; Paper Products; Petroleum & Coal Products; Machinery; Chemical Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Transportation Equipment; and Primary Metals. The three manufacturing industries reporting paying lower prices on average in July are: Miscellaneous Manufacturing; Fabricated Metal Products; and Food, Beverage & Tobacco Products. Five industries reported no change in prices for the month of July compared to June.
Backlog of Orders(c)
ISM’s Backlog of Orders Index registered 45 percent in July, which is 4 percentage points lower than the 49 percent reported in June. Of the 81 percent of respondents who reported their backlog of orders, 16 percent reported greater backlogs, 26 percent reported smaller backlogs, and 58 percent reported no change from June.
The four industries reporting increased order backlogs in July are: Petroleum & Coal Products; Paper Products; Furniture & Related Products; and Computer & Electronic Products. The nine industries reporting decreases in order backlogs during July — listed in order — are: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Plastics & Rubber Products; Machinery; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Chemical Products.
New Export Orders(c)
ISM’s New Export Orders Index registered 54 percent in July, which is 0.5 percentage point higher than the 53.5 percent reported in June. This is the 25th consecutive month of growth in the New Export Orders Index.
The nine industries reporting growth in new export orders in July — listed in order — are: Paper Products; Primary Metals; Miscellaneous Manufacturing; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; Machinery; and Chemical Products. The four industries reporting a decrease in new export orders during July are: Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.
Imports(c)
Imports of materials by manufacturers continued to expand in July as the Imports Index registered 53.5 percent, 2.5 percentage points higher than the 51 percent reported in June. This is the 23rd consecutive month of growth in imports.
The seven industries reporting growth in imports during the month of July — listed in order — are: Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Chemical Products. The three industries reporting a decrease in imports during July are: Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Machinery. Eight industries reported no change in imports in July compared to June.
Buying Policy
Average commitment leadtime for Capital Expenditures increased 9 days to 112 days. Average leadtime for Production Materials increased 1 day to 55 days. Average leadtime for Maintenance, Repair and Operating (MRO) Supplies remained the same at 24 days.
