U.S. July ISM Manufacturing - Strong but with supply problems
July’s ISM manufacturing index of 55.6 from 53.3 is stronger than expected and the highest since May 2022, suggesting this year’s manufacturing revival, led by AI-related business investment, is accelerating further.
The employment index of 52.8 from 49.7 is the strongest since August 2022 and the first positive since January 2025 but supported by favorable seasonal adjustments.
New orders increased to 56.7 from 56.0, but are still below May’s 56.8 and this fairly stable over the last three months. Production at 58.5 from 52.2 was more impressive.
The composite was also supported by delivery times, where a rise to 58.9 from 57.4 suggests the Middle East continues to cause supply problems.
Despite this the prices paid index, which does not contribute to the composite, slipped to 71.1 from 73.0, though this is still high and suggests price pressures will persist unless the Strait of Hormuz opens on a sustained basis.
