ISM: Backlogs Growing (CONT’D FROM PAGE 6)
inventory in the supply chain. Demand dropped, with the (1) New Orders Index contracting again, (2) Customers’ In- ventories Index remaining at a low level but approaching 40 percent and (3) Backlog of Orders Index decreasing but still in growth territory. Consumption (measured by the Production and Employment indexes) was mixed during the period. “The Employment Index contracted for the third month in a row after expanding for eight straight months (Sep- tember 2021 through April), but panelists again indicated month-over-month improvement in hiring ability in July. Challenges with turnover (quits and retirements) and re- sulting backfilling continue to plague efforts to adequately staff organizations. Inputs — expressed as supplier deliv- eries, inventories and imports — continued to constrain production expansion, but to a significantly lesser extent compared to June. “Manufacturing performed well for the 26th straight month. There are signs of new order rates softening — cited in 16 percent of general comments, compared to 17 percent in June — as panelists are increasingly concerned about excessive inventories and continuing record-high lead times. Employment activity remained strongly posi- tive in spite of the uncertainty with new order rates.” Eleven manufacturing industries reported growth in July, among them Printing & Related Support Activities, Computer & Electronic Products, Machinery, and Electrical Equipment, Appliances & Components.
“The Employment Index contracted for a third straight month at 49.9 percent, 2.6 percentage points higher than the 47.3 percent recorded in June. The Supplier Deliver- ies Index reading of 55.2 percent is 2.1 percentage points lower than the June figure of 57.3 percent. The Inventories Index registered 57.3 percent, 1.3 percentage points high- er than the June reading of 56 percent. The New Export Orders Index reading of 52.6 percent is up 1.9 percentage points compared to June’s figure of 50.7 percent. The Im- ports Index grew again in July, up 3.7 percentage points to 54.4 percent from 50.7 percent in June. “The U.S. manufacturing sector continues expanding — though slightly less so in July — as new order rates con- tinue to contract, supplier deliveries improve and prices soften to acceptable levels. According to Business Survey Committee respondents’ comments, companies continue to hire at strong rates, with few indications of layoffs, hiring freezes or headcount reduction through attrition. Panelists reported higher rates of quits, reversing June’s positive trend. Prices expansion eased dramatically in July, but in- stability in global energy markets continues. “Sentiment remained optimistic regarding demand, with six positive growth comments for every cautious com- ment. Panelists are now expressing concern about a soft- ening in the economy, as new order rates contracted for the second month amid developing anxiety about excess
8 August 8, 2022
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