July ISM manufacturing index was 1 pt above expectations at 55.5 but down from 56.2 in June and lower for a 3rd month. New Orders fell by 5 pts to 53.5 and Backlogs fell by 2.5 pts. Employment rose less than 1 pt to 58.6. Inventories at the manufacturing level did rise back above 50 for the 1st time since March but Inventories at the customer level remained lean at 39. Export Orders rose .5 pt to 56.5 but is below the recent high of 62 in May. Prices Paid rose .5 pt to 57.5 but remains well below the high in April of 78. This will likely reverse next month as the CRB index is rising to a near 3 month high today. Bottom line, while the ISM remains firmly above 50, just 10 of the 18 industries surveyed reported growth with 4 reporting outright contraction and the drop in New Orders is worth watching. With this said, the market is breathing a sigh of relief that while down for a 3rd month, the ISM is still hanging in with inventory builds still, albeit at a slower pace, and export growth continuing.
