US ISM manufacturing dropped to 58.1 in July, down from 60.2, missed expectation of 59.3. Price paid component dropped to 73.2, down fro 76. and missed expectation of 75.5. Employment component rose 0.5 to 56.5.
Chair of the Institute for Supply Management Manufacturing Business Survey Committee Timothy R. Fiore said that:
- “Comments from the panel reflect continued expanding business strength.
- “Demand remains strong, with the New Orders Index at 60 percent or above for the 15th straight month, and the Customers’ Inventories Index remaining low.
- “The Backlog of Orders Index continued to expand, but at lower levels.
- “Production and employment continues to expand in spite of labor and material shortages.
- ” Inputs — expressed as supplier deliveries, inventories and imports — had expansion increases, due primarily to negative supply chain issues, but at easing levels compared to the prior month.
- “Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue.
- ” Export orders expanded, but at lower levels.
- ” Price pressure remains strong, but the index softened for the second straight month.
- “Demand remains robust, but the nation’s employment resources and supply chains continue to struggle.
- “Respondents are again overwhelmingly concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their business,”
Some quotes from some respondents:
- “Global demand is still strong. Working on contingency plans for the Chinese tariffs. We will probably onshore most of that material. Labor availability is becoming an issue.” (Computer & Electronic Products)
- “As a result of new tariffs on materials to/from China, we are taking measures to move impacted materials ahead of effective dates, which in some cases is resulting in holding higher inventories.” (Chemical Products)
- “Steel cost increases are causing a lot of negotiations. The increases are real and will affect costs beginning in the third quarter of 2018.” (Electrical Equipment, Appliances & Components)
- “Reviewing the business case for importing manufactured parts from China, as new tariffs will lead to increased costs that we will pass along to our domestic customers.” (Transportation Equipment)
- “The steel tariffs are a concern to us. We have already seen steel prices increase due to the threat of the tariffs and are seeing kickback from our customers due to the higher prices. We are concerned that the end customer will go to off shore to purchase the finished product.” (Fabricated Metal Products)
- “Tariffs are [resulting in] customs inspection-time increases on imported raw materials from China. Logistics seems to be improving, but we are seeing a [continuing] tight chemical bulk tanker market.” (Plastics & Rubber Products)
- “The so-called trade war is now taking its toll on business activity, resulting in substantial reductions to new export orders. China has all but stopped taking orders, causing inventories to build up in the U.S. Domestic business is steady. However, it is too small to carry the load that export markets have retreated from. As a result, we will be meeting as a corporation next week to recast our second-half sales and revenue projections.” (Wood Products)
