Economic activity in the manufacturing sector grew in July for the 38th consecutive month, while the overall economy grew for the 57th consecutive month, according to the July Manufacturing ISM (Institute for Supply Management) Report On Business.
Norbert Ore, chair of the ISM's Manufacturing Business Survey Committee, said in an interview with Manufacturing.net that the growth in manufacturing for the 38th consecutive month indicates a vibrant economy. "Business is good and spending is strong, and should continue to be so," said Ore. "The strong new orders number, 56.1 percent, is a leading indicator that the third quarter will be strong also." Manufacturers, as opposed to the consumer sector, have been dealing with the energy crisis and high energy prices for the past 38 months, commented Ore. But manufacturers have not passed on the higher energy prices to their customers. "The manufacturing industry has absorbed higher energy costs by increasing production and becoming more efficient, thereby offsetting price increases," explained Ore. Ore does not envision any changes in how manufacturers deal with the energy situation until there is a change in the overall cost of crude oil. He believes that oil will probably peak at $75 a barrel.The 12 top performing industries reporting growth in July are: Primary Metals; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Furniture & Related Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Paper Products; Plastics & Rubber Products; Nonmetallic Mineral Products; and Machinery.
The PMI indicates that the manufacturing economy grew in July for the 38th consecutive month as it registered 54.7 percent, an increase of 0.9 percentage point when compared to June's reading of 53.8 percent. (A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.)
ISM's New Orders Index registered 56.1 percent in July. The index is 1.8 percentage points lower than the 57.9 percent registered in June. July is the 39th consecutive month the index has exceeded 50 percent.
ISM's Production Index registered 57.6 percent in July, 2.5 percentage points higher than the 55.1 percent reported in June. July is the 39th consecutive month of growth in the index. June's reading of 48.7 percent. June ended 12 consecutive months of growth in manufacturing employment, and July now represents a return to employment growth in the sector.