Good(ish) news: WSJ reporting inflationary pressures "cooling"

torbee

HR King
Gold Member
I say good(ish) because with that cooling comes some slowing of the overall economy and production in the manufacturing sector. But still, we all (well maybe not some GOP congressional candidates) should be cheering for a reversal of rapid rising prices.

U.S. Factory Growth Slowed in July on Decline in Orders​

Inflation pressures eased last month as commodity price pressures diminished, according to surveys of purchasing managers​

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The Institute for Supply Management’s index of U.S. manufacturing activity was 52.8 in July, down from 53 the prior month.PHOTO: ANDREA MORALES FOR THE WALL STREET JOURNAL
By Harriet Torry
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Aug. 1, 2022 1:08 pm ET


Growth at U.S. manufacturing companies was its weakest in two years in July, but inflationary pressures showed signs of cooling as commodity prices eased, according to surveys of purchasing managers released Monday.

The Institute for Supply Management’s index of U.S. manufacturing activity was 52.8 in July as a drop in new orders signaled declining demand for factory products. That was its lowest reading since June 2020 and down from 53 the prior month.

A reading above 50 indicates that factory activity is expanding while a reading below 50 signals contraction.
The ISM index, based on a poll of manufacturers across the U.S., said businesses are “now expressing concern about a softening in the economy, as new order rates contracted for the second month amid developing anxiety about excess inventory in the supply chain.”

A separate measure of U.S. manufacturing produced by S&P Global also pointed to slower growth due to weaker demand. Its purchasing managers index was 52.2 in July, down from 52.7 in June. S&P Global said a growth spurt in the spring has quickly gone into reverse, and a gloomier outlook means companies are taking an increasingly cautious approach to purchasing and inventories.

Both surveys reported easing supply constraints and a slower pace of cost inflation, a fresh sign that inflation may have peaked. A slowdown in the pace of price increases also is positive news for companies struggling with high input costs from transportation, fuel and commodities.
The ISM’s prices index dropped by 18.5 percentage points, its steepest decline since June 2010, as prices of raw materials rose much more slowly in July. Backlogs eased in a sign that supply-chain disruptions are lessening.

PMI figures for global economies pointed to weak manufacturing sectors elsewhere. Chinese manufacturing activity contracted in July, as Beijing’s stringent Covid-19 restrictions and weak demand undercut hopes for a more robust economic revival.
The eurozone manufacturing sector also contracted last month, as factories grappled with high inflation, the war in Ukraine and energy supplies. The U.K.’s PMI fell to a 25-month low of 52.1 in July from 52.8 in June.

The data come amid concerns about a global economic slowdown. The U.S. economy shrank in the latest quarter, for the second quarter in a row. The European Union’s statistics agency last week said economic growth in the eurozone accelerated in the second quarter even as Russia’s invasion of Ukraine sent energy and food costs surging and shattered household and business confidence.
 

MitchLL

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Dec 26, 2018
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Not important.

World War Nancy is about to hit the fan.

I heard the story was on cable news.
 

MepoDawg#

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Oct 29, 2012
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Unfortunately we’re hit by the chip shortage. One of our two main assembly lines has been down for two weeks with no end in sight. It was also down for two weeks in June. They’re working on three different solutions, but they aren’t quick fixes.

A recession will help us as orders will slow and we can try to get lead times down. However, we’re now starting to lose more employees. They’re still on-site working, cross training and doing other things, but some refuse to do that. We have seen less PPV (Purchase Price Variance) and actually getting to be positive with prices falling.
 
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torbee

HR King
Gold Member
Unfortunately we’re hit by the chip shortage. One of our two main assembly lines has been down for two weeks with no end in sight. It was also down for two weeks in June. They’re working on three different solutions, but they aren’t quick fixes.

A recession will help us as orders will slow and we can try to get lead times down. However, we’re now starting to lose more employees. They’re still on-site working, cross training and doing other things, but some refuse to do that. We have seen less PPV (Purchase Price Variance) and actually getting to be positive with prices falling.
Knock on wood, but so far Mrs. Torbee's company (they supply industrial gasses, welders and safety supplies to manufacturers) is still seeing brisk business. Like so many others, the biggest problem is having enough inventory on hand to sell, due to logistics bottlenecks and other supply chain problems.

I am cautiously optimistic that we will not see a full-blown recession, as both consumer demand and business demand remain high with many of the price problems being more supply chain-related than due to poor fundamentals.
 

jamesvanderwulf

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Nov 27, 2015
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People's Republic of Johnson County
We've put in at least 15 swimming pools here in eastern Iowa so far this year, could have been double that if the manufactures could get the pools out faster. 3 - 4 month wait on delivery. Feel bad for those folks in their 600K homes waiting on delivery...