July 2015 Institute for Supply Management

Economic growth was mixed in July 2015 according to data from the Institute for Supply Management (ISM).  Our nation’s manufacturing continued to expand in the period, albeit at a slower pace.  However, service growth surged in month, suggesting the current expansion is unlikely to end soon.

Despite the slower pace, manufacturing expanded for the 31st consecutive month in July.  Atlas would have liked to have seen the breadth of the uptick be healthier as just 11 of the 18 manufacturing industries reported growth.  However, new orders improved which should help output in the months and quarters ahead.  The employment component of the manufacturing ISM slowed in July.

All four components of the nonmanufacturing ISM tally accelerated in the period.  Output increased for the 72nd consecutive month; this will help third quarter GDP.  New orders picked up the pace which should help output in the near future.  Payrolls increased faster than in June.  Finally, suppliers are delivering at an even slower pace than a month earlier.  This suggest  firms are producing at a rate that is closer to their capacity than before, which could cause firms to invest in more labor and (eventually) capital equipment as demand for their services continues to accelerate.

America’s economy is still growing.  This expansion in getting long in the tooth, a theme Atlas has been discussing for some time now, but the ISM data is not pointing at an immediate turn in the business cycle.  Instead, forward looking components of this indicator bespeak future growth is on the horizon.  Of course, Atlas recognizes the pace of the expansion is slow, but there is still some wind left in America’s sails which is  better than the doldrums experienced by other nations.                 (by C. Cox)