Subscribe to our free, weekly email newsletter!


July manufacturing activity at highest level since June 2011, says ISM

By Jeff Berman, Group News Editor
August 01, 2013

Manufacturing activity in July continued its solid turnaround since dropping to its lowest levels since June 2009 in May, according to the Institute for Supply Management’s monthly Manufacturing Report on Business.

The PMI, the index used by the ISM to measure manufacturing activity, hit 55.4 in July, which is 4.5 percent higher than June’s 50.9 and is the highest PMI level since coming in at 55.8 in June 2011. The July PMI is ahead of the 12-month average of 51.6 and has been over 50 in seven of the last eight months.

Economic activity in the manufacturing sector had expanded for 34 straight months prior to contraction in June 2012, and overall economic activity has now expanded for 50 straight months and six times in the first seven months of 2013, according to ISM.

New Orders, which are often referred to as the engine that drives manufacturing, followed a 3.1 percent increase in June with a 6.4 percent increase in July to 58.3. The ISM said that this increase is the highest for the index going back to April 2011, when it checked in at 63.8. And Production—at 65.0—was up 11.6 percent over June’s 53.4 and stands as the highest reading since May 2004’s 65.3, according to the ISM. Employment rose 5.7 percent from June to 54.4.

“The New Orders growth was strong and broad-based with various industries growing in July,” said Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, in an interview. “Production was also very good, but it cannot be sustained at that level so it is a factor of growth in new orders and working off of the backlog of orders (down 1.5 percent in July to 45.0) and putting the petal to the metal for the month.”

Looking ahead to the rest of the year, Holcomb said July’s numbers serve as a strong leaping off point, adding that the ISM’s semiannual report issued in April called for the same, making July consistent with that.

What’s more, he added there were no broad economic signs that suggest otherwise at this point.

In the respondents’ comments section of the report, the underlying theme regarding economy was mostly optimistic. A furniture and related products respondent said that sales are holding steady and business is good, and a paper products respondent noted that overall conditions remain steady and slightly above prior year.

July Prices fell 3.5 percent to 49.0. Holcomb noted that while manufacturers like lower prices, it is not preferred for an extended period, making July a surprise in that regard and adding it would not be surprising to see it top 50 next month. If prices stay too low for too long, he said it is a reflection of soft overall demand, which is the antithesis of the current environment.

Inventories in July fell 3.5 percent to 47.0. This decrease, though, is more of a byproduct of heavy production and new order activity, explained Holcomb.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Company says the Cloud offering allows customers to respond more quickly to new business opportunities, without significant upfront cost and implementation times.

As e-commerce continues to take a bigger piece of the holiday package delivery pie, it stands to reason that companies need to be proactive and prepared in order to deliver premium service during the busiest time of year, which is rapidly approaching. And that is exactly what transportation giants UPS and FedEx are doing this year. How are they doing it exactly? The primary step they are taking is to up their numbers of seasonal staffers.

A recent hearing of the Subcommittee on Coast Guard and Maritime Transportation suggests that the U.S. Merchant Marine industry may be poised for a major comeback.

Spot market freight volumes for the month of August remained elevated compared to seasonal norms, according to data issued this week Portland, Oregon-based freight marketplace platform and information provider DAT.

Factors such as rising freight rates, shrinking capacity, an increased desire for global supply chain visibility, have all worked together to drive the need for instituting a culture of continuous improvement in logistics operations and transportation management systems (TMS). To meet today's complex logistics challenges, managers are stepping into a more streamlined, automated approach to transportation management in order to function at optimal levels both domestically and internationally. Read the latest special report.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA