The 2020 Mid-Year Economic Update_long

More Mixed Signals for U.S. Economy

ISM Report shows manufacturing expansion, yet concerns linger.

Economic activity in the manufacturing sector expanded in June for the 30th consecutive month, according to the latest Manufacturing ISM Report on Business, but concerns linger over the pace of economic growth as well as global turmoil.

One manufacturing representative on the ISM Manufacturing Business Survey Committee noted that the "downturn in oil and gas markets (is) impacting demand" and another in machinery said business was a "bit slow" and that "sales (are) down from last year." However, others were slightly more upbeat, crediting the stronger housing market and using words like "stable" and "improved slightly" to depict the current manufacturing climate.

Concern over softness in Europe and decline in Asia are hindering the U.S. economic climate, according to Cliff Waldman, director of economic studies for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

“They serve to reinforce the still precarious nature of the global recovery from the 2008-2009 recession," he said. "Global difficulties have weakened U.S. export demand and reinforced longstanding weakness in the growth of U.S. capital equipment expenditures. Both are critical sources of business for the U.S. factory sector, whose short-term performance prospects remain murky. Even moderate growth is at risk.”

The mixed signals echo what MDM has been hearing from distributors, whose outlook is again summed up with the phrase "cautious optimism." As the second half of 2015 begins, the nation can't seem to fully recover from the great recession, as detailed in Good News, Bad News for U.S. Economy, one of the articles in the 2015 Distribution Trends Special Issue, which came out last month.

We could know more soon about how the rest of the year transpires. The results of the second quarter MDM-Baird Distribution Survey will be released July 25, and according to the last survey: “2Q15 trends will set the tone for the remainder of 2015.”

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