The Institute for Supply Management has shown that the manufacturing activity came in with a reduced rate of contraction for July. The manufacturing index came in at 48.9. This is still slightly in the contraction zone but is above the 46.5 reading expected from Dow Jones. This also marks a higher reading than the 44.8 level in June and the 42.8 level in May.
The level of 50.0 is the level that is breakeven with under 50 being the contraction and above 50 being the expansion.
Inventories continued to shrink, but at a lower pace. That came in at 33.5 for July after a reading of 30.8 in June. The reading on inventories shows that many goods will ultimately need to be restocked.
The July production index was 57.9 in July and the new orders index was 55.3.
The employment reading was weak at 45.6 for July, but above the 40.7 reading from June.
The prices paid component does show some inflation, likely from commodity prices. July’s prices paid came in at 55.0 after a reading of 50.0 in June. The ISM did pop stocks further as many are hopeful that this low reading in inventories will ultimately create a snap-back higher.
We have the S&P now hitting 1,001.04, which is also right at a 50% gain from the March lows and the first time we have seen a four-digit number in many months. The NASDAQ is challenging the 2,000 mark as well.
Jon C. Ogg
August 3, 2009