Introduction
Today's report from the Institute for Supply Management confirmed that inflation pressures in the manufacturing sector persisted in July, albeit at a somewhat slower rate than during June.
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Earlier today, the Institute for Supply Management reported that its index measuring the economy's manufacturing activity during July came in at a reading of 62.0, up from June's 61.1. The July result was right on the consensus expectation.
The index's price component came in at a reading of 77.0, an overall value that from a historical perspective, I surely would consider to be "troublesome." This was down four points from an 81.0 reading in June, but July's number remained high, considering how the results are scored overall. Readings above 50.0 indicate expansion.
In addition and per this measure, July was the 29th consecutive month of increasing prices. (As recently as last October, the price component stood at a much lower 58.5.)
ISM reported that 58% of its survey respondents reported higher prices during July, while 4% reported lower ones. The June results were 66% and 4%, respectively. Thus, the change in skew from late last year continues. For example, in October 2003, the numbers were 26%/9%.
The following table examines ISM price data over the ten months ended July. So you can see how the numbers have been trending, data for March through July 2003 are also included.
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INSTITUTE FOR SUPPLY MANAGEMENT PMI INDEX
-- TOTAL INDEX AND PRICE COMPONENT
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Respondents Reporting
Higher, Lower, or
Unchanged Prices
Month/ Overall Price ---------------------
Year Index Index Higher Lower Unch.
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07/04 62.0 77.0 58% 4% 38%
06/04 61.1 81.0 66% 4% 30%
05/04 62.8 86.0 74% 2% 24%
04/04 62.4 88.0 77% 1% 22%
03/04 62.5 86.0 73% 1% 26%
02/04 61.4 81.5 65% 2% 33%
01/04 63.6 75.5 54% 3% 43%
12/03 66.2 66.0 37% 5% 58%
11/03 62.8 64.0 33% 5% 62%
10/03 57.0 58.5 26% 9% 65%
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07/03 52.6 53.0 21% 15% 64%
06/03 50.4 56.5 26% 13% 61%
05/03 50.0 51.5 21% 18% 61%
04/03 46.2 63.5 37% 10% 53%
03/03 46.6 70.0 47% 7% 46%
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On Wednesday (8/4), ISM will report its index covering activity in the economy's non-manufacturing sector. In recent months, this measure's price component also has shown some disquieting results.
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