Monday, August 02, 2010

ISM Manufacturing report shows slowing, but still growing

As widely expected, the ISM Manufacturing report showed that the manufacturing sector of the economy slowed a bit in July, but was still growing at a healthy pace. Production was still up. Orders were still up. Exports rose, and at a faster pace. Employment was not only still up, but growing at a faster pace.

In fact, ISM says that "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (58 percent) corresponds to a 5.4 percent increase in real gross domestic product (GDP). In addition, if the PMI for July (55.5 percent) is annualized, it corresponds to a 4.5 percent increase in real GDP annually." Of course, the trajectory of the ISM index for the remainder of the year remains an open question.

ISM reports that 10 of the 18 manufacturing industries reported growth in July, with 4 of the 18 reporting contraction.

Prices increased and at a faster pace, suggesting that deflation is not taking root.

-- Jack Krupansky


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