Original Press Release
New Manufacturing Data Signals a Short-Term Correction
Press release date: August 1, 2007
"Deceleration Led By Retreats in Both New Orders and Production," Huether Says
WASHINGTON, D.C., August 1, 2007 - Despite today's report from the Institute for Supply Management (ISM) that the closely-watched PMI Index for Manufacturing retreated a bit to a level of 53.8 percent in July from 56 percent in June, the National Association of Manufacturers chief economist David Huether remained confident in the signs of continued, positive momentum.
"Last month's deceleration was led by retreats in both new orders and production," Huether said. "However, with the prior month's results being the strongest postings in more than a year for orders and nearly three years in the case of production, a short-term correction is to be expected and should not be seen as alarming.
"Despite the drop in manufacturing activity, the PMI Index remains elevated compared to the levels attained in the fourth quarter of 2006 and the first quarter of this year," he said. "I'm confident that the manufacturing expansion will continue to gain momentum in coming months."
The trade components of today's release continue to offer encouraging news. For the first time in a year and a half, new export orders bested imports for a third consecutive month in July.
"The trade situation is improving for manufacturers and today's report offers encouraging evidence that this positive trend is spilling over into the third quarter," Huether said.
Combined with the fact that the ISM's index for new orders and backlogs continue to show positive growth, today's report is further evidence that the manufacturing economy remains on solid ground entering the second half of the year.
The ISM Prices Index of 65 shows that manufacturers are still paying higher prices compared to June. However, the pace of higher costs is moderating. After peaking in April at 73, the ISM Prices Index has decelerated for three consecutive months.
"This is a positive indication that inflationary pressures within the manufacturing sector appear to be contained," he said.
The National Association of Manufacturers is the nation's largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Headquartered in Washington, D.C., the NAM has 11 additional offices across the country. Visit the NAM's award-winning web site at www.nam.org for more information about manufacturing and the economy.
CONTACTS: J.P. FIELDER (202) 637-3089; DAVID HUETHER (202) 637-3148