Photographer: Luke Sharrett/Bloomberg

U.S. Factory Gauge Continues to Signal Solid Growth in July

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American manufacturers turned in another solid month in July amid steady growth in production, orders and employment, according to figures from the Institute for Supply Management released Tuesday.

Highlights of ISM Manufacturing (July)

  • Factory index eased to 56.3 (forecast was for 56.4) from 57.8 a month earlier; readings above 50 indicate growth
  • Employment gauge cooled to 55.2 from 57.2
  • ISM’s gauge of new orders eased to 60.4 from 63.5

Key Takeaways

While the ISM index settled back from a June level that was the second-highest since 2011, it remains above the average over the past year, as are its three main gauges. The figures signal that optimism about the economy is enduring among American businesses even as prospects dissipate for swift changes on tax and infrastructure policy from Washington lawmakers.

Goods producers are sustaining progress that’s been building since 2015. Steady U.S. consumer and business demand, along with a recovering global economy, are allowing manufacturing to hit its stride.

A pickup in the ISM’s prices-paid index indicates more factories also reported paying higher prices for inputs and raw materials last month, also a reflection of improving world demand.

Official’s View

“I don’t see why there’d be any significant change, outside of any major international disruption,” Tim Fiore, chairman of ISM’s factory survey committee, said by phone about the positive trajectory for U.S. manufacturing. “We have unemployment that’s very low, pressure on wages. Supplier shortages are still there.”

Other Details

  • Measure of export orders decreased to 57.5 in July from 59.5
  • Production index cooled to 60.6 from 62.4
  • Order backlogs measure fell to 55 from 57
  • Index of prices paid increased to 62 from 55, the biggest one-month increase this year

— With assistance by Chris Middleton, and Kristy Scheuble

(Updates with ISM official’s comments under Official’s View.)
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