August 1, 2017 – The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that the manufacturing sector is growing while a reading below 50 indicates a contraction
The July ISM Manufacturing report came in at a level of 56.3, above expectations of 56.2, but below June’s level of 57.8. New orders and production were strong again in the ISM Manufacturing index rising to 60.4 and 60.6, respectively. Prices were also up to 62.0 with raw material prices up for the 17th straight month.
15 of the 18 manufacturing industries reported growth in July with the highest growth in plastics and rubber products, electrical equipment and appliances, and wood products. With the ISM reading well above 50, we expect to see the manufacturing sector expanding and pushing up GDP in this quarter. There are other readings that provide insight into different components of the manufacturing sector that release later this month, such as new orders for durable goods and industrial production.