ISM: Manufacturing (CONT’D FROM PAGE 14)
"The Supplier Deliveries Index indicated faster delivery performance after seven consecutive months in expan- sion territory. The reading of 49.3 percent is down 4.9 per- centage points from the 54.2 percent recorded in June. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent in- dicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Invento- ries Index registered 48.9 percent, down 0.3 percentage point compared to June's reading of 49.2 percent. "In July, U.S. manufacturing activity contracted at a fast- er rate, with declines in the Supplier Deliveries and Em- ployment Indexes contributing as the biggest factors in the 1-percentage point loss of the Manufacturing PMI®. "The demand indicators improved, with the New Orders and Backlog of Orders indexes contracting at slower rates, while the Customers' Inventories and New Export Orders
traction in April 2020. (A Manufacturing PMI above 42.3 percent generally indicates an expansion of the overall economy.) The New Orders Index contracted for the sixth month in a row following a three-month period of expan- sion; the figure of 47.1 percent is 0.7 percentage point high- er than the 46.4 percent recorded in June. The July read- ing of the Production Index (51.4 percent) is 1.1 percentage points higher than June's figure of 50.3 percent. The Prices Index remained in expansion territory, reg- istering 64.8 percent, down 4.9 percentage points com- pared to the reading of 69.7 percent reported in June. The Backlog of Orders Index registered 46.8 percent, up 2.5 percentage points compared to the 44.3 percent in June. The Employment Index registered 43.4 percent, down 1.6 percentage points from June's figure of 45 percent.
indexes contracted at slightly faster rates. A 'too low' status for the Customers' Inven- tories Index is usually considered positive for future production. "Regarding output, the Production In- dex increased month over month to move further into expansion territory, however; the Employment Index dropped further into contraction as panelists indicated that managing head count is still the norm at their companies, as opposed to hiring. The mixed indicators in output suggest compa- nies still being cautious in their hiring even with an increase in production. "Finally, inputs (defined as supplier de- liveries, inventories, prices and imports), on net, declined further into contraction territory. The Inventories Index moved marginally further into contraction territo- ry after expanding in April, as companies work to reduce or adjust inventory to bet- ter align with demand. "Looking at the manufacturing econ- omy, 79 percent of the sector's gross do- mestic product (GDP) contracted in July, up from 46 percent in June. Notably, 31 percent of GDP is strongly contracting (registering a composite PMI® of 45 per- cent or lower), up from 25 percent in June. The share of sector GDP with a PMI® at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, none expanded in July, compared to four in June," says Spence. Among the 10 industries reporting con- traction in July are: Printing & Related Sup- port Activities; Paper Products; Chemical Products; Machinery; Wood Products; and Food, Beverage & Tobacco Products.
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August 11, 2025
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