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The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementﾙ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "While the overall economy continues to improve, the manufacturing sector reversed its recent trend of contraction and grew during July for the first time in five months. The improvement in New Orders continues to be very encouraging, and reinforces the possibility that the economy will continue to improve during the second half of the year."
ISM's Backlog of Orders Index indicates that order backlogs improved in July. However, manufacturing Employment continued to decline in July as the index remained below the breakeven point (an index of 50 percent) for the 34th consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 17th consecutive month. New Export Orders grew in July for the 19th consecutive month. July's Imports Index grew for the ninth consecutive month.
Comments from purchasing and supply managers remain mixed, although it appears many industries have hit bottom and are either coming back or have at least stopped declining. Manufacturers supplying the construction industry mention a positive effect from the seasonal upswing in the industry. Natural gas costs continue to be a major concern to many of the respondents.
ISM's PMI is 51.8 percent in July, an increase of 2 percentage points when compared to 49.8 in June. ISM's New Orders Index rose 4.4 percentage points from 52.2 percent in June to 56.6 percent in July. ISM's Production Index rose 0.4 percentage point from 52.9 percent in June to 53.3 percent in July. The ISM Employment Index is at 46.1 percent for July, a decrease of 0.1 percentage point when compared to the 46.2 percent reported in June.
ISM's Supplier Deliveries Index registered 51.1 percent, 1.1 percentage points higher than June's 50 percent. ISM's Inventories Index rose to 45.9 percent in July from the 41.3 percent reported in June. ISM's Customers' Inventories Index for July is at 42.5 percent, a decrease of 3 percentage points compared to the June reading of 45.5 percent. ISM's Prices Index in July is 53 percent, a decrease of 3.5 percentage points from June's 56.5 percent.
ISM's Backlog of Orders Index increased 1 percentage point, registering 51 percent in July compared to 50 percent in June. ISM's New Export Orders Index registered 53.8 percent, down 0.6 percentage point from June's 54.4 percent, while ISM's Imports Index declined 0.4 percentage point to 56 percent in July from 56.4 percent in June.
"The surge in New Orders is very positive for the sector. While many respondents mention that they fail to see the recovery in their businesses, others indicate a higher level of activity than they have seen in some time. Natural gas costs are a major concern for many companies, and others will continue to struggle due to higher oil prices. Overall, the manufacturing sector is trending positively and appears poised to continue a pattern of growth in the second half of the year," said Ore.
Of the 20 industries in the manufacturing sector, 12 industries reported growth: Leather; Glass, Stone, & Aggregate; Tobacco; Paper; Wood & Wood Products; Miscellaneous*; Furniture; Food; Electronic Components & Equipment; Instruments & Photographic Equipment; Printing & Publishing; and Transportation & Equipment.
"There are no commodities reported in short supply. Commodities reported up in price are: Caustic Soda; Chemicals; Fuel; and Natural Gas. The commodities reported down in price are Corn; Corrugated Cartons; and Natural Gas," Ore stated.