US manufacturing growth slows in July
A reading above 50 indicates expansion, and so despite the slowdown, US manufacturing is still in good shape. Yet, even with reduced sentiment for the month, the index averaged 53.0 over the past three months (May through July), up from 52.0 over the prior three months (February through April). While last week’s Chicago PMI report was better than expected, elevated inventory levels over the past two quarters may weigh on manufacturing output in the near term.
The ISM’s manufacturing purchasing managers index, which was released ahead of its normal 10am Eastern Time schedule, fell to 52.7 in July from 53.5 in June. “Nevertheless, you’ve got to like the fact that we’ve been growing for 31 consecutive months”. Along those lines, growth in both new orders (up from 56.0 to 56.5) and production (up from 54.0 to 56.) ticked higher in July, expanding at a decent but still less-than-desired pace. The ISM production index climbed to 56 from 54.
Hiring slipped to 52.7, down 2.8 percentage points from June’s 55.5 reflecting growth at a slower rate.
The Labor Department will follow Friday with its monthly employment report.
Demand appears to be largely domestic.
Steel Dynamics Inc.is caught in the crosscurrents of falling commodity prices, a strong dollar and signs of rising demand from some U.S. industries.
The data “suggests that the economic recovery is leaking momentum going into the second half of this year”, said Millan Mulraine, deputy head of U.S. Strategy at TD Securities.
“A major downside to the report is that the manufacturing trade deficit continues to worsen”, Meckstroth said.