Lower USD, rebounding global economy and stable oil price to underpin U.S. manufacturing – TD Economics

The Institute for Supply Management manufacturing index dropped to 56.3 in July from June’s print of 57.8. This was marginally below consensus expectations of 56.4. Most subcomponents came in lower on the month, with the exception of inventories that rose to 50 from 49.

Most subcomponents show healthy growth in activity. Production and new orders both dropped down to 60.2 from 62.4 and 60.4 from 63.5, respectively. The employment sub-index dropped 2 points but it remains in expansionary territory at 55.2.

Export orders dropped down 2 points, while the imports sub index moved up by the same amount. Still, both continued to be in the 56 to 58 range, indicating healthy growth in international shipments. Prices paid rose to 62 in July from June’s 55. The spread between new orders and inventories dropped slightly, but remains supportive of future growth in the sector at 10.6.

The manufacturing sector of the U.S. continues to indicate healthy growth. The slight slowdown in July is not surprising, following on the heels of June’s solid performance. A recovering global economy, a comparatively stable oil price and the lower U.S. dollar is expected to continue to underpin the country’s manufacturing, noted TD Economics in a research report.