Manufacturing expanded again in July, marking three months in a row of improvement. The manufacturing index rose from 52.6 in June to 54.2 in July, the biggest gain in 15 months.
The index fell to a low of 41.5 in April, ending 131 consecutive months of growth. It improved to 43.1 in May, but did not return to a state of growth until June. According to index calculations, a number below 50 indicates contraction in the industry, while a number over 50 suggests expansion.
This isn’t to suggest that manufacturing has recovered to pre-pandemic levels. Although the ISM index indicates that manufacturing is improving on a month to month basis, the industry is still trying to dig itself out of a hole.
New orders, backlog of orders, production, and employment all rose in July. New orders improved to 61.5, from 56.4 in June. Production jumped from 57.3 to 62.1. Backlog of orders is up to 51.8 from 45.3. Employment expanded from 42.1 in June to 44.2 in July, suggesting that employment is still falling, only at a slower rate.
Thirteen of the eighteen tracked industries expanded in July. Wood products, furniture, textiles, printing, and food and beverage saw the most growth last month. Only three sectors saw growth slow – transportation equipment, machinery, and fabricated metal products.
‘The growth cycle continues for the second straight month after three prior months of COVID-19 disruptions. Demand and consumption continued to drive expansion growth, with inputs remaining at parity with supply and demand,’ Chair of the Institute for Supply Management, Timothy Fiore said.