Manufacturing index shows overall growth for fifth straight month

The Institute for Supply Management's (ISM) purchasing manufacturers index (PMI) fell to 52.6 in July, but optimism remains strong among global manufacturers.
By Bob Vavra, content manager, CFE Media August 1, 2016

The Institute for Supply Management's (ISM) purchasing manufacturers index (PMI) fell to 52.6 in July, but optimism remains strong among global manufacturers. Image courtesy: CFE MediaManufacturing remained strong in July, as concerns over the Brexit issues in Europe and global oil prices have not kept manufacturing from growing.

The Institute for Supply Management’s (ISM) monthly purchasing manufacturers’ index (PMI) fell slightly to 52.6% from its 53.2% reading in June. The index was still comfortably above the 50% mark that indicates overall growth in the manufacturing industry. July marked the fifth straight month the index has finished over 50%.

Manufacturers are keeping a cautious eye on price fluctuations, the European Union’s handling of Great Britain’s planned exit and the U.S. presidential races, but for now, the index remains solidly in the black.

One area of potential concern was a fifth straight increase in the prices index, which was at 55.0% in July. The index decrease of 5.5 percentage points is an indication of higher raw material prices, said Bradley Holcomb, chairman is ISM’s Manufacturing Business Survey Committee.

"Manufacturing registered growth in July for the fifth consecutive month, as 12 of our 18 industries reported an increase in new orders in July (same as in June), and nine of our 18 industries reported an increase in production in July (down from 12 in June)," Holcomb said in a press release.

Among the comments from committee members:

  • "With Brexit, keeping (a) close eye on how this will impact our business." (Chemical Products)
  • "Stronger than expected end to Q2 (June) saw us beat our forecast which is the first time in five quarters, though we were still below Annual Operation Plan." (Computer & Electronic Products)
  • "Strong demand in our market has business in an upswing." (Nonmetallic Mineral Products)
  • "International capital orders are increasing." (Fabricated Metal Products)
  • "Brexit has not impacted our business thus far." (Food, Beverage & Tobacco Products)
  • "Retail sales have really slowed in the last 45 days. Our industry is seeing it everywhere. Steel prices are rising." (Machinery)
  • "Seems to be a bit more optimism in the markets. But, U.S. Presidential race might dampen the mood." (Plastics & Rubber Products)
  • "Demand and industry production are both slowing down." (Transportation Equipment)
  • "Oversupply continues to dominate demand. Poor weather is having a negative impact on building, creating short term slow demand." (Wood Products)
  • "Oil and gas industry sector continues to realign staff to reflect $40-$50/barrel oil. This price range is seen as the new normal for the foreseeable future." (Petroleum & Coal Products)

Bob Vavra is content manager, CFE Media, bvavra@cfemedia.com.

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