ISM: Manufacturing sector heated up in July

“In July, US manufacturing activity remained in expansion territory, growing at its fastest rate in more than four years,” said Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

Spence noted that 38% of the comments received were positive and 62% were negative. “Pricing volatility was mentioned in 57% of negative comments, the Iran war 43%, increasing lead times 22% and tariffs 18%,” she said.

Following a four-month contraction, the New Orders Index has now expanded for seven months in a row, registering 56.7%, 0.7 points ahead of June.

The Production Index is now at its highest figure since November 2021. At 58.5%, it rose 6.3 points from June’s 52.2%.

Although down by 1.9 points from June, the Prices Index remained in expansion in July at 71.1%.

The Backlog of Orders Index rose 4.5 points from June to 55% in July.

Out of 16 manufacturing industries, including primary metals, transportation equipment, machinery, and fabricated metal products, all showed expansion except chemical products.

Respondent comments

“Business is still solid; we will increase revenue by 3% to 5%,” said one fabricated metal products respondent. “We are considering foreign steel purchases for early next year because domestic steel mills are getting greedy.”

“No normalcy in sight in the world of metals,” said a primary metals participant. “It makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.”

“Now that it seems the buildout of AI infrastructure globally is nearing real activation, products going into data centers are at full procurement and manufacturing ramp-up,” noted a machinery sector respondent. “Similarly, defense is at an all-time high, with most of our product orders going to these two industries.”