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US ISM factory gauge jumps, Inflated by longer delivery times

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US manufacturing expanded more than forecast last month as a gauge of supplier-delivery times shot up amid robust orders and production.

[NEW YORK] US manufacturing expanded more than forecast last month as a gauge of supplier-delivery times shot up amid robust orders and production, data from the Institute for Supply Management showed on Monday.

Factory index climbed to 60.2, matching the second-highest since 2004, from 58.7; readings above 50 indicate expansion

Gauge of supplier deliveries jumped to 68.2, the second- highest since April 1979, from 62; figure shows lead times increasing as producers have trouble meeting demand

While indexes of orders, production and factory employment remained elevated, the ISM's main gauge of June factory activity was inflated by a surge in the group's measure of supplier deliveries, indicating lengthening lead times.

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The delays potentially reflect purchasing managers' efforts to acquire materials ahead of President Donald Trump's planned tariffs on Chinese products, which would follow levies on steel and aluminum from around the world. Such demand, coming on top of steady consumption and business investment, is testing capacity limits of both manufacturers and the transportation sector.

Supply-chain disruptions are also helping to push up input prices. The ISM's latest measure of costs of raw and other materials used in manufacturing fell in June but remained close to a seven-year high.

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