PMI Manufacturing Sample Shows No Growth

Gradual deceleration to a standstill is the story of PMI manufacturing's sample whose July flash is at 50 even to indicate no change, that is no growth, from June. This is the worst showing for this sample in 10 years and will no doubt be cited at next week's FOMC as an indication of weakness in manufacturing, a sector that tops the list of the Federal Reserve's concerns.

Production in manufacturing is lower this month and also at a 10-year low with employment ending six years of continual growth. Inventories of inputs are also down this month. Weakness in auto manufacturing and heightened global uncertainties were cited by the sample.

In contrast, the services side of the sample is reporting an upturn so far this month, to the best rate of growth since April. New orders are higher with respondents citing strength in consumer spending in what hints at perhaps another month of strength for retail sales. Yet employment slowed noticeably (27-month low) which the report says is in line with a slump in overall optimism.

Slowing in global trade has been sending manufacturing PMIs falling across the world, including those for both Germany and Japan.