US Manufacturing: Hot but not blazing - Wells Fargo

Despite some cooling, manufacturing activity remained strong in July according to the ISM survey, explained analysts at Wells Fargo. They noted that while hiring picked up, orders slowed.

 Key Quotes: 

“Manufacturing activity remained strong in July, with the ISM index coming in at 58.1. That indicates a slower pace of factory output than in June, when the index was a touch above 60. Most sub-indices moderated over the month and, along with comments from respondents, hint that the recent trade environment has begun to effect activity.”

“The hiring index rose half a point to 56.5. That suggests no letup in the pace of manufacturing hiring in Friday’s payroll report, where the industry added an average of 26,000 jobs in the first half of the year. Yet respondents continued to note difficulty hiring workers and labor availability as an issue for getting work done.”

“Input price growth cooled in July, with the prices paid index moving down. At 73.2, however, the level continues to suggest manufacturers are facing significant increases in material costs, with comments pointing specifically to recent tariffs.”

“With spending plans, orders and activity still at fairly high levels, the modest slowdown of late does not look problematic for the overall growth picture.”