Economy

Manufacturing Conditions Grow Tougher: PMI
Written by David Schollaert
August 9, 2022
The S&P Global US manufacturing PMI—another measure of manufacturing—fell to 52.2 in July, its lowest level in two years, as output and new orders decreased last month.
July’s results are down slightly from 52.7 in June, as US manufacturers report the toughest business conditions since 2009. (Recall that a reading above 50.0 indicates growth.) The report said the US manufacturing sector lost growth momentum in early July, attributed to a drop in production throughout July, due to weakened client demand, raw material shortages, and challenges in finding candidates for vacancies.
“The rising cost of living is the most commonly cited cause of lower sales, as well as the worsening economic outlook,” according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
Factory goods are down for the second straight month, leading to the first drop in production in two years. Foreign client demand also decreased at the start of the third quarter, with new exports falling at the fastest pace since May 2020, the report said.
Buying patterns were more cautious in July, as companies cut back on investments and new orders for business equipment and machinery declined sharply.
Backlogs increased in July as material shortages put more pressure on staff capacity. Firms have the challenge of sourcing raw materials and having enough employees at the correct times, Williamson said.
“Supply chain problems remain a major concern but have eased, taking some pressure off prices for a variety of inputs,” added Williamson. “This has fed through to the smallest rise in the price of goods leaving the factory gate seen for nearly one and a half years, the rate of inflation cooling sharply to add to signs that inflation has peaked.”
By David Schollaert, David@SteelMarketUpdate.com

David Schollaert
Read more from David SchollaertLatest in Economy

Chicago Business Barometer falls back in April, remains in contraction
The Chicago Business Barometer declined in April, reversing March’s gains, according to Market News International (MNI) and the Institute for Supply Management (ISM).

Fewer manufacturers optimistic about the economy
PMA’s April report shows that only 16% of surveyed manufacturers anticipate an increase in economic activity in the next three months (down from 23% in March)

Architecture billings continue to slide in March
Architecture firms said billings continued to decline in March, according to the latest Architecture Billings Index (ABI) released by the American Institute of Architects (AIA) and Deltek.

Beige Book shows concerns about trade policy
Manufacturing was mixed, but two-thirds of districts said activity was little changed or had declined.

New York state manufacturing index drops again in April
Firms were pessimistic, with the future general business conditions index falling to its second lowest reading in the more than 20-year history of the survey