U.S. manufacturing expanded for the 14th consecutive month, the Institute for Supply Management reported, as its monthly PMI index rose to 57.1% in July from 55.3% in June.
Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), said the July ISM report showed the industrial sector growing at a fast pace.
“Over the last 25 years, the ISM index has been at 57.1 or higher only 13% of the time. New orders, production, supplier deliveries, and employment were all very positive for growth in July."
The new orders index showed healthy growth, registering a 4.5 point gain to 63.4% in July from the 58.9% reading in June. The production index grew, up 1.2 points to 61.2%.
The employment index also indicated solid growth, up 5.4 points to 58.2%. Ksenia Bushmeneva, an economist at TD Economics, said this was reinforced by the employment report from the U.S. Bureau of Labor Statistics:
"Manufacturing industry added 28k jobs in July. On a year-over-year basis, manufacturing payrolls are up 1.5% - the fastest pace of growth since November 2012."
Comments from manufacturers were generally positive, said Bradley Holcomb, ISM’s chair of the Manufacturing Business Survey Committee, though he cited some concern over “global geopolitical situations.” One supply chain executive at a transportation equipment company commented:
“Business is still very good and we are very optimistic for the rest of the year.”
The growth in the sector was broad, with 17 of the 18 manufacturing industries reporting increased activity, led by furniture and textiles. Only wood products reported contraction for July.
The Markit purchasing managers index, released July 24, also had shown continued growth for manufacturing, though at a slower pace. The index registered 56.3 in July, down from 57.3 in June.
“U.S. manufacturers are enjoying a summer of scorching growth,” said Chris Williamson, chief economist at Markit.
“Output grew in July at a rate only just below the four-year peak seen in June as inflows of new orders surged higher again. The data suggest the sector is growing at an annualized rate of roughly 8% as we moved into the second half of the year.”
While Markit saw strong production, the firm noted that the growth in demand was domestic and not in an uneven global economy.
“[N]ew export order growth remained relatively subdued, with the latest index reading unchanged from June’s five-month low and only slightly above the neutral 50.0 value.”