July 2020 Manufacturing ISM Report On Business Shows Manufacturing Growing while Employment Continues to Contract

By Steve Clouther

Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector grew in July, with the overall economy notching a third consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing grew in July, as the PMI registered 54.2 percent, 1.6 percentage points higher than the June reading of 52.6 percent.  The PMI signaled a continued rebuilding of economic activity in July and reached its highest level of expansion since March 2019, when the index registered 54.6 percent.

ISM’s New Orders Index registered 61.5 percent in July, an increase of 5.1 percentage points compared to the 56.4 percent reported in June. his indicates that new orders grew for the second consecutive month.

The Production Index registered 62.1 percent in July, up 4.8 percentage points from 57.3 percent in June, indicating growth for the second consecutive month.

ISM’s Employment Index registered 44.3 percent in July, 2.2 percentage points higher than the June reading of 42.1 percent.  This is the 12th consecutive month of employment contraction, at a slower rate compared to June.

The delivery performance of suppliers to manufacturing organizations was slower in July, as the Supplier Deliveries Index registered 55.8 percent.  This is 1.1 percentage points lower than the 56.9 percent reported in June.

The Inventories Index registered 47 percent in July, 3.5 percentage points lower than the 50.5 percent reported for June.  Inventories contracted after two consecutive months of expansion.

ISM’s Backlog of Orders Index registered 51.8 percent in July, a 6.5-percentage point increase compared to the 45.3 percent reported in June, indicating order backlogs expanded after four consecutive months of contraction.

Of the 18 manufacturing industries, 13 reported growth in July, in the following order: Wood Products; Furniture & Related Products; Textile Mills; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Chemical Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Primary Metals; Petroleum & Coal Products; Miscellaneous Manufacturing; and Electrical Equipment, Appliances & Components.  The three industries reporting contraction in July are: Transportation Equipment; Machinery; and Fabricated Metal Products.


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