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Manufacturing Export Wooden Crate, reading Made in USA. 3D Illustration for ISM Manufacturing Index (PMI). (Photo: AdobeStock)

ISM Manufacturing Index (PMI) Beats Forecast in July, Continuing Expansion Cycle

PMI Surpasses Pre-Pandemic Level, Hits the Highest Level Since April 2019

Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Manufacturing Index (PMI) came in stronger than expected at 54.2% in July, up from 52.6% in June. This reading indicates an overall expansion in the economy for the third straight month after one month of contraction due to disruptive efforts to mitigate the spread of coronavirus (COVID-19).

Forecasts for the PMI ranged from a low of 49.0 to a high of 57.0, and the consensus forecast was 53.5.

The reading also indicates manufacturing sector growth continued for the second straight month after three prior months of COVID-19-related disruptions.

“Panel sentiment was generally optimistic (two positive comments for every one cautious comment), continuing a trend from June,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Demand and consumption continued to drive expansion growth, with inputs remaining at parity with supply and demand.”

Demand is growing as is evident by the strong gain in the New Orders Index at 61.5%. That represents an increase of 5.1 from the June reading of 56.4%. New orders are being supported by the New Export Orders Index re-entering expansion.

The ISM Manufacturing Index (PMI) has now exceeded pre-pandemic levels. It hasn’t been as high since April 2019. The rate of increase for the PMI is a level not seen since August 1980.

Index	Series Index Jul	Series Index Jun	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI^®	54.2	52.6	+1.6	Growing	Faster	2
New Orders	61.5	56.4	+5.1	Growing	Faster	2
Production	62.1	57.3	+4.8	Growing	Faster	2
Employment	44.3	42.1	+2.2	Contracting	Slower	12
Supplier Deliveries	55.8	56.9	-1.1	Slowing	Slower	9
Inventories	47.0	50.5	-3.5	Contracting	From Growing	1
Customers’ Inventories	41.6	44.6	-3.0	Too Low	Faster	46
Prices	53.2	51.3	+1.9	Increasing	Faster	2
Backlog of Orders	51.8	45.3	+6.5	Growing	From Contracting	1
New Export Orders	50.4	47.6	+2.8	Growing	From Contracting	1
Imports	53.1	48.8	+4.3	Growing	From Contracting	1
OVERALL ECONOMY	Growing	Faster	3
Manufacturing Sector	Growing	Faster	2

Manufacturing ISM Report On Business data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

August 3, 2020

The Institute for Supply Management (ISM) Manufacturing

Group of friends sitting outdoors with shopping bags; several people holding smartphones and tablets. (Photo: AdobeStock/ OneInchPunch/PPD)

Economy

Consumer Sentiment ‘Trendless’, Ticks Down in July Amid Efforts to Pause Reopening

Shutdown Advocates Hurting Consumers, Faster Economic Recovery

Ann Arbor, Mich. (PPD) — The Survey of Consumers final reading on consumer sentiment fell from 78.1 in June to 72.5 in July, slightly missing beating the consensus forecast. Forecasts for the headline index ranged from a low of 71.0 to a high of 79.0, and the consensus forecast was 73.2.

Richard Curtain, the chief economist for the Survey of Consumers, said the Consumer Sentiment Index has remained “trendless” during the pandemic, though blamed the dip on the “resurgence of the coronavirus.” However, the blame lays with the pausing of reopening state economies, as the greater evidence from data indicators clearly demonstrates.

The Current Economic Conditions Index fell from 87.1 in June to 82.8 in July. The Expectations Index fell from 72.9 to 65.9 in July, tied with the six-year low recorded in May.

The Conference Board Consumer Confidence Index (CCI) also fell in July, down 5.7 points after gaining significantly in June, missing economists’ expectations. The Index now stands at 92.6 (1985=100), down from an upwardly revised reading of 98.3 in June.

August 1, 2020

The Survey of Consumers final reading on

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July 31, 2020

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U.S. initial jobless claims graph on a tablet screen. (Photo: AdobeStock)

Economy

Jobless Claims Tick Higher to 1.4M for Week Ending July 25, Insured Unemployment Rate Rises

Washington, D.C. (PPD) — The U.S. Labor Department (DOL) reported initial jobless claims ticked higher to 1,436,000 for the week ending July 25, an increase of 12,000. The previous week was upwardly revised (6,000) to 1,422,000.

Forecasts ranged from a low of 1,300,000 to a high of 1,550,000. The consensus forecast was 1,388,000.

The 4-week moving average came in at 1,368,500, an increase of 6,500. The previous week’s average was revised up by 1,750 from 1,360,250 to 1,362,000.

Lagging Jobless Claims Data

The advance seasonally adjusted insured unemployment rate was 11.6% for the week ending July 18, up 0.5% from the previous week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending July 18 was 17,018,000, an increase of 867,000 from the previous week’s revised level. The previous week’s level was revised down by 46,000 from 16,197,000 to 16,151,000.

The 4-week moving average was 17,058,250, a decrease of 435,500 from the previous week’s revised average. The previous week’s average was revised down by 11,500 from 17,505,250 to 17,493,750.

The highest insured unemployment rates in the week ending July 11 were in Puerto Rico (24.6), Nevada (22.0), Hawaii (21.0), Louisiana (16.6), New York (16.3), Georgia (16.0), California (15.5), Connecticut (15.1), Massachusetts (14.5), and the Virgin Islands (14.5).

The largest increases in initial claims for the week ending July 18 were in Louisiana (+5,728), Virginia (+5,654), California (+4,680), Tennessee (+3,713), and Alabama (+3,113), while the largest decreases were in Florida (-23,855), Texas (-17,608), Georgia (-16,139), New Jersey (-12,893), and Washington (-12,261).

July 30, 2020

Initial jobless claims ticked higher to 1,436,000

GDP, Coronavirus (Covid-19) virus and economic crisis, symbolized by graph with word GDP going down to picture that coronavirus affects Gdp and leads to downturn and recession, 3d illustration. (Photo: AdobeStock)

Economy

Advance Estimate for Q2 2020 GDP Fell 32.9% Due to ‘Stay-at-Home’ Orders

The Bureau of Economic Analysis (BEA) reported the “advance” estimate for second quarter (Q2) gross domestic product (GDP) was -32.9% on an annualized basis, due to mitigation efforts to slow the spread of coronavirus (COVID-19). Real GDP fell 5.0% in Q1 2020.

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending.
Bureau of Economic Analysis (BEA)

Forecasts ranged from a low of -38.5% to a high of -25.5%. The consensus forecast was -35.0%.

The advance estimate is based on incomplete data. A more complete “second” estimate will be released on August 27.

July 30, 2020

The "advance" estimate for second quarter (Q2)

A photo of a home pending for sale with sale pending on a realty sign. (Photo: AdobeStock)

Economy

Pending Home Sales Continue to Surge, Gaining 16.6% in June

NAR Raised Forecasts for Existing and New Home Sales on Strong Housing Data

The National Association of Realtors (NAR) reported pending home sales surged more than three times the consensus forecast by 16.6% in June, after soaring a record 44.3% in May. As a result of the stronger-than-expected recovery and growth in housing, the NAR raised its forecast for the market.

Regionally, four major regions saw monthly growth in pending home sales, while the Northeast was the only region to not see gains year-over-year. The Pending Home Sales Index (PHSI) — a forward-looking indicator of home sales based on contract signings — shot higher to 116.1. Year-over-year, contract signings are now 6.3% nationally.

Forecasts ranged from a low of -10.0% to a high of 15.6%. The consensus forecast was only 5.2%. An index of 100 is equal to the level of contract activity in 2001.

“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”

The NAR now forecasts existing home sales to decline by just 3%, with sales ramping up to 5.6 million by the fourth quarter. New home sales are forecast to rise by 3%.

New home sales soared 13.8% (±17.8%) to a seasonally adjusted annual rate of 776,000 in June, easily beating the consensus forecast. The month of May was revised up from 672,000 to a rate of 682,000

Barring any change in government policy, Mr. Yun expects gross domestic product (GDP) growth of 4% in 2021, which will further boost existing and new home sales, both forecasted to grow by 7% and 16%, respectively. Mortgage rates are expected to hold at roughly 3% over the next 18 months. Home prices are forecast to rise 4% in 2020, before moderating to 3% in 2021.

Regional Pending Home Sales

The month of June marks two consecutive months of monthly gains in all four major regions.

The PHSI for the Northeast rose 54.4% to 95.4 in June, but is still down 0.9% from a year ago. In the Midwest, the index rose 12.2% to 110.9 last month, up 5.1% from June 2019.

Pending home sales in the South gained 11.9% to an index of 140.3, up 10.3% from June 2019. The index in the West rose 11.7% in June to 99.6, up 4.7% year-over-year.

“The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Mr. Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”

July 29, 2020

The National Association of Realtors (NAR) reported

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