Here we are in the middle of what I've always called "summer slump" and there have been a few surprises this past week. The trouble is that it's not so surprising - or it shouldn't be anyway. The first surprise is that the Institute for Supply Management (ISM) Manufacturing Business Survey showed that economic activity in the manufacturing sector expanded in July for the 14th consecutive month. The July Purchasing Managers Index (PMI) registered 57.1%, an increase of 1.8 percentage points from June's reading of 55.3%, indicating an expansion in manufacturing.
All but one of the 18 manufacturing industries reported growth in July with furniture & related products coming in on top of the growth list and computer & electronics at the bottom. Only wood products reported contraction in July. Plastics & rubber products were fifth in the growth category.
Yet, when you read the survey respondents' comments, you see words and phrases like "Status quo . . . sales are okay" and "slow growth in business" and "Bookings down" along with "but shipments strong," and "we are very optimistic for the rest of the year." While optimism is good, it's not a saleable commodity.
Still, New Orders were up 4.5% to 63.4% in July from June's 58.9%; Production bumped up 1.2% to 61.2 in July; and employment even bounced up to 58.2% in July from June's 52.8% - a whole 5.4 percentage points.