US July ISM manufacturing PMI 52.8 vs 52.0

  • Prior was 53.0
  • Prices paid 60.0 vs 75.0 expected (prior 78.5) — fourth largest decline on record
  • Production 53.5 vs 54.9 prior
  • Employment 49.9 vs 47.3 prior
  • New orders 48.0 vs 49.2

It’s all about the price paid number. I’m a bit confused on why the consensus was so high. The prices component measures the delta so a decline shows a slower pace of price increases, which makes sense to me given what’s happened in commodities. In any case, this report is what the Fed would have hoped to see.

“The slowing in price increases is being driven by (1) volatility in
the energy markets, (2) softening in the copper, steel, aluminum and
corrugate markets and (3) a significant decrease in chemical demand.
Notably, 21.5% of respondents reported paying lower prices in
July, compared to 8.3 percent in June,” the report said.

On the downside, new orders should be a bit of a concern. There’s a notable comment below about companies drawing down inventories on recession fears. That kind of thing can become self-fulfilling.

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