Economic activity in the U.S. manufacturing sector expanded in
July, with the Institute for Supply Managements
purchasing managers index (PMI) moving up 4.5 percentage points
to 55.4, its highest level in the past 12 months.
"May was exaggerated
on the downside and July to the upside," said Michael
Montgomery, U.S. economist for Lexington, Mass.-based IHS
Global Insight Inc. "(Manufacturing) conditions are better,
just not as good as the July numbers suggest."
The production index
at 65 "appears to be an anomaly," he said. "The production
reading would be far more credible if backlogs and inventories
were not (below 50)." The order backlog index fell to 45 last
month from 46.5 in June, with 10 industries, including primary
metal producers and fabricators, reporting a decline in
Metal producers and
fabricators reported growth last month, according to the
Institute for Supply Managements manufacturing business
survey. Fabricators saw new orders rise, but producers did not;
producers increased production, while fabricators output
was unchanged; and fabricators said their inventories fell last
month but deemed their customers inventories too high,
while producers inventories were flat compared with
Metal producers and
fabricators both said that overall they paid less for materials
in July vs. June. Hot-rolled carbon steel and stainless steel
pricing moved higher, while aluminum, copper and other steel
products fell in price, the survey showed.
construction spending was estimated at a seasonally adjusted
annual rate of $883.9 billion in June, off slightly from May
but 3.3 percent higher than in June last year, the U.S. Census
spending declined 0.4 percent from May and public spending fell
1.1 percent, Census data show.
Spending on highways
and streets fell 2.9 percent month over month and 12.4 percent
year over year, while spending on manufacturing construction
projects weakened 2.1 percent from May and was off 3.2 percent
from a year ago.
On the commercial
side, "companies are simply not expanding. (They) avoid putting
up new buildings when the outlook is uncertain or bleak," IHS
Global Insight economists Patrick Newport and Stephanie Karol
said in an Aug. 1 note.
spending is likely to decline through year-end "because of the
budgetary problems that state and local governments face, but
then turn around in the first half of 2014," the economists