- Sep 13, 2002
- 93,779
- 189,366
- 113
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.
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
Follow
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.
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
By Harriet Torry
Follow
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.