NAM: Monday Economic Report
The IHS Markit U.S. Manufacturing PMI notched another record in July, with strong growth in demand, production and hiring, and respondents remained very positive in their outlook for the next six months. Yet, the sector continues to experience record-setting supplier shortages and cost pressures, with the backlog of orders also just shy of May’s record pace.
Meanwhile, the Institute for Supply Management® reported that manufacturing activity expanded robustly once again, even with the headline index edging down from 60.6 in June to 59.5 in July, a six-month low. The sample comments noted continuing concerns with supply chain disruptions, rising costs and workforce shortages. Prices pulled back in July after soaring in June at the fastest pace since July 1979 but remained very elevated.
Manufacturing employment rose by 27,000 in July. Over the first seven months of 2021, total employment in the sector has risen by 135,000. There remained 433,000 fewer manufacturing employees relative to pre-pandemic levels.
The average hourly earnings of production and nonsupervisory workers in manufacturing rose from $23.78 in June to $23.86 in July, with a 4.5% increase over the past year, up from $22.84 in July 2020.
Nonfarm payroll employment rose by 943,000 workers in July, led by a rebounding leisure and hospitality sector. The U.S. economy continues to have 5,702,000 fewer workers today than in February 2020. The unemployment rate dropped to 5.4% in July, a post-pandemic low.
New orders for manufactured goods rose 1.5%, up from $498.6 billion in May to a record $506.0 billion in June. Over the first six months of 2021, factory orders rose 8.0%. Factory shipments were also at an all-time high, up 1.6% in June and 6.0% year-to-date.
Private manufacturing construction spending fell 1.1% to $70.41 billion in June, pulling back for the second straight month to a five-month low. There continues to be hope for a recovery in the second half of this year. With that said, private manufacturing construction has plummeted 7.6% over the past 16 months since the pandemic began.
The U.S. trade deficit rose to $75.75 billion in June, a new record, buoyed by a sharp increase in goods imports. Goods exports and imports both increased to new heights in June. At the same time, the service-sector trade surplus dropped to $17.43 billion in June, the lowest since August 2012.
According to the latest non-seasonally adjusted data, U.S.-manufactured goods exports totaled $546.94 billion through the first six months in 2021, soaring 17.59% from $465.11 billion year to date in 2020.