U.S. Manufacturing ISM (July)

The U.S. manufacturing ISM was released earlier than-expected this morning. And the headline wasn't encouraging, although the details were better. The index unexpectedly fell in the month, to 52.7 from 53.5 in June. This was, however, the first setback since March but the setback itself has some company, most recently, a slightly softer-than-expected GDP result for Q2, flat real consumer spending in June, and a small 0.1% increase in construction spending.

"In any event, the ISM manufacturing headline was dragged down by employment -2.8 pts to a 2-month low of 52.7 mostly petroleum & coal and inventories -3.5 pts to a 3-month low of 49.5. Supplier delivery delays were little changed at 48.9. But there was some positive news, as new orders +0.5 pts to an 8-month high of 56.5 and production +2.0 pts to a 3-month high of 56.0 rose" notes BMO Economics.

The five components have an equal weighting of 20% each. Of the 18 industries surveyed, 11 said they expanded. And their comments didn't leave the impression that there was a broad-based slowdown in play. If anything, the negativity was based on 1) low oil prices, 2) Avian Flu, and 3) summer slowdown. Summer slowdown or not, the oil price declines are having a significant impact on manufacturing, says BMO Economics.