Factories heated up in July; skepticism over economy remains

Aug. 3 (UPI) — The Institute for Supply Management’s July Manufacturing Purchasing Managers’ Index report showed on Monday that economic activity picked up in the manufacturing sector.

The Manufacturing PMI, a measure of the health of the manufacturing sector, hit its best mark since May 2022. The index reached 55.6%, a 2.3% increase over June, making it the 21st consecutive month of overall economic expansion.

“In July, U.S. manufacturing activity remained in expansion territory, growing at its fastest rate in more than four years,” Susan Spence, chair of ISM’s Manufacturing Business Survey Committee, said in a statement. “Of the five subindexes that make up the PMI, four grew faster compared to the previous month; the exception was the Inventories index, which was down just 0.2 percentage point.”

Comments received in the survey were more negative than positive despite improving index numbers. Sixty-two percent of respondents shared negative comments, with most voicing concerns about pricing volatility, followed by the Iran war, increasing lead times and tariffs.

Industry leaders surveyed said that the current state of pricing volatility is worse than during the COVID-19 pandemic.

“The pricing volatility and lead-time extensions in this market are arguably worses than the pandemic era,” one comment said. “During COVID-19, we saw a surge of price hikes and inventory buy-ups, which caused constraints that eventually leveled out. We are seeing nothing but consistent upward trends for both pricing and lead times that show no signs of slowing down.”

An executive from the metal industry said current trends make them “yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.”

The index for production received the biggest bump in July, up 6.3 points from 52.2 to 58.5%. New export orders and backlogs also posted gains in July.

Employment reversed course from June, climbing 3.1 points from 49.7 to 52.8%. It was the first time employment has expanded for a month in more than two years.