Aug. 7, 2013
PMI Registers Huge Jump in July
The manufacturing economy enjoyed one of its biggest jumps in years last month, according to the most recent ISM Report on Business from the Tempe, Ariz.-based Institute for Supply Management. ISM’s July PMI registered 55.4 percent, an increase of 4.5 percentage points from the June reading and the highest of 2013. A reading above 50 indicates growth.
Of the 18 manufacturing industries reporting to ISM, 13 reported growth in July, including fabricated metal products, primary metals and electrical equipment, appliances and components. Miscellaneous manufacturing and machinery were among the four industries showing contraction.
According to Bradley J. Holcomb, chairman of ISM’s Manufacturing Business Survey Committee, the average PMI of 52.1 for the first seven months of 2013 corresponds to GDP growth of 3.1 percent. Moreover, if the PMI for July is annualized, it corresponds to a 4.1 percent increase in GDP.
In addition to the PMI, many other key indices showed substantial growth in June. The New Orders Index increased by 6.4 percentage points to 58.3 percent, while the Production Index increased by 11.6 percentage points to 65 percent.
The Employment Index registered 54.4 percent, an increase of 5.7 percentage points compared to June's reading of 48.7 percent. The Prices Index registered 49 percent, decreasing 3.5 percentage points from June, indicating that overall raw materials prices decreased from the previous month.
Inventories registered 47 percent in July, which was 3.5 percentage points lower than the 50.5 percent reported the previous month. The reading indicates that inventories contracted in July, following one month of growth.