Activity in the Manufacturing sector was slightly weaker than expected in July but still remained at strong levels.  According to ISM, the Manufacturing PMI index fell from 60.2 down to 58.1 compared to expectations for a reading of 59.4.  Putting this level into perspective, the Manufacturing PMI index is less than three points from its multi-year high of 60.8 from February.

Breadth in this month’s report wasn’t particularly strong as the vast majority of components showed declines relative to June with the biggest drops coming in Supplier Deliveries, Backlog Orders, and Imports, while Business Inventories and Employment were the only two categories that increased on a m/m basis.  On a y/y basis, breadth was better as the number of components rising and falling was equally split at five.

One component we wanted to highlight specifically is New Orders.  Looking at the chart below, this category is definitely trending lower from its high of 67.4 in December.  At the same time, though, this component has been at or above 60 for 15 straight months now, so it can’t stay there forever.  Going back to 1948, there have only been two other periods where this component was at 60 or above for 15 or more months.  The first spanned the period from September 1954 through January 1956 (17 months), while the second period spanned 19 months from December 1971 through June 1973.

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