July 2013 ISM Reports

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The most-closely followed nationwide manufacturing diffusion index jumped in July. The Institute for Supply Management’s (ISM) PMI 55.4 percent, an increase of 4.5 percentage points from June's reading of 50.9 percent (50 percent is the breakpoint between contraction and expansion). “Comments from the [respondent] panel generally indicate stable demand and slowly improving business conditions,” said Bradley Holcomb, chair ISM’s Manufacturing Business Survey Committee. 

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The magnitude of the PMI’s advance was somewhat unexpected, as the Chicago Business Barometer --usually a fairly reliable indicator of how the PMI will behave -- printed well below expectations. In any event, one Paper Products respondent opined that "overall conditions remain steady and slightly above prior year."

The pace of growth in the service sector exploded higher as well in July. The non-manufacturing index (now known simply as the “NMI”) registered 56 percent, 3.8 percentage points higher than the 52.2 percent registered in June. That move was the largest monthly increase since April 2009 and handily beat expectations of 53.1 percent. The non-manufacturing report contained no comments from industries we track. 

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Relevant commodities up in price included caustic soda, corrugated boxes and packaging, oil, diesel and gasoline, and paper products. Natural gas was the only relevant commodity down in price. No relevant commodities were in short supply.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.