Friday, August 1, 2014

ISM Manufacturing Index Reached Highest Level All Year in July

The ISM Manufacturing Index reached 57.1 in July, its highest level since last November. The index has been above its expansionary threshold of 50 for 14 months. The ISM report points to future growth.

The details of the report were strong. The New Orders Index surged to 64.3, the highest level in over 3 years. The Inventory Index shrank 4.5 points to 48.5, below the expansionary threshold. As a result of new orders improving and inventories shrinking, the gap between new orders and inventories – a proxy for future production – surged 9.9 points to 15.8.

The Employment Index also spiked 5.4 points to 58.2. Job growth in June was the strongest all year, according to a BEA report today. While employment remained strong in July, fewer jobs were added so this index will likely decline in next month’s ISM report.

While the Export Orders Index dropped 1.5 points to 53.0, the Import Index saw a greater magnitude of decline, losing 5.0 points and settling at 52.0, positively impacting GDP growth.

Read the ISM release.

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