Wednesday, August 8, 2012

USA Manufacturing Continues Contracting: "Increasing economic uncertainty"

ISM: Monthly USA PMI

USA Economy The manufacturing sector contracted for the 2nd consecutive month in July 2012. USA manufacturing growth did "rebound" slightly from the June 35-month low (lowest since July 2009 at the end of the Great Recession). Before these recent contractions, there had been 34 consecutive monthly expansions (since August 2009). The PMI of 49.8 (+0.1) continues below the average of 51.9 (from January 2005 through July 2012). However, the overall USA economy did continue to expand for the 38th consecutive month (since June 2009 with a PMI reading greater than 42.6).

ISM Manufacturing Index (PMI) by Month The July 2012 PMI increased +0.1 to 49.8, the first increase in the past 3 months. The PMI reached a first post-recession peak in March 2010 at 59.3 and a higher peak in January 2011 at 59.9. The Great Recession low was 33.1 in December 2008. The post-recession low has been 49.2 in July 2009. A reading greater than 50 indicates manufacturing sector expansion and a reading greater than 42.6 indicates overall economic expansion.

Bradley Holcomb, Chair of the ISM Manufacturing Business Survey Committee said, "The PMI registered 49.8 percent, an increase of 0.1 percentage point from June's reading of 49.7 percent, indicating contraction in the manufacturing sector for the second consecutive month, following 34 consecutive months of expansion. The New Orders Index registered 48 percent, an increase of 0.2 percentage point from June and indicating contraction in new orders for the second consecutive month, but at a slightly slower rate. Both the Production Index and the Employment Index remained in growth territory, registering 51.3 percent and 52 percent, respectively. The Prices Index for raw materials registered 39.5 percent, an increase of 2.5 percentage points from the June reading of 37 percent, indicating lower prices on average for the third consecutive month. A growing number of comments from the panel this month reflect a slowdown in their businesses and general concern over increasing economic uncertainty".

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