Employment expands for the first time in 34 months. Export orders Expand.
Please consider the July 2026 ISM® Manufacturing PMI® Report
The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
“The Manufacturing PMI® registered 55.6 percent in July, 2.3 percentage points above the June figure and the highest reading since May 2022 (55.9 percent). The overall economy continued in expansion for the 21st month in a row. (A Manufacturing PMI® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the seventh consecutive month after four straight readings in contraction, registering 56.7 percent, up 0.7 percentage point compared to June’s figure of 56 percent. The July reading of the Production Index (58.5 percent) is 6.3 percentage points higher than the 52.2 percent recorded in June and the highest figure since November 2021 (60.5 percent). The Prices Index remained in expansion (or ‘increasing’ territory), registering 71.1 percent, a 1.9-percentage point decrease from June’s reading of 73 percent. The Backlog of Orders Index registered 55 percent, up 4.5 percentage points compared to the 50.5 percent recorded in June. The Employment Index reading of 52.8 percent is up 3.1 percentage points from June’s figure of 49.7 percent, putting the index in expansion territory for the first time in 33 months,” says Spence.
Key ISM Points
- New Orders Growing
- Production Growing
- Employment Growing, a Change from Contracting
- Prices Increasing
- Imports Growing
- Exports Growing, a Change from Contracting
Respondent Comments (Emphasis Mine)
- “We are seeing a very opportunistic and reactive marketplace. If shortage items become available, we opportunistically buy. Some customers are reducing inventory; others are pulling forward demand. As many customers that are slowing down, an equal number are growing. It looks like a lot of shuffling and shifting market share.” [Chemical Products]
- “We continue to operate in a favorable demand environment driven by growth in the semiconductor, AI, advanced packaging, and high-performance computing markets. Recent company reports indicate strong sales growth and continued investment in manufacturing capacity, technology and customer-support capabilities. This scenario supports a positive business outlook and creates opportunities to leverage increased purchasing scale across the enterprise.” [Computer & Electronic Products]
- “Now that it seems the buildout of AI infrastructure globally is nearing real activation, products going into data centers are at full procurement and manufacturing ramp-up. Thus, demand for our semiconductor end products and connectivity (power, networking and photonics) is booming. Similarly, defense is at an all-time high, with most of our product orders going to these two industries. Order volumes for medical, industrial and consumer products are markedly lower.” [Machinery]
- “Aerospace and defense demand continues to be strong and growing, based on business backlogs. Competing for scare supply — electronics, certain critical minerals and other categories — is challenging on-time fulfillment for our supply chains. This is expected to get worse with co-dependent sectors also remaining strong and restocking challenges for automotive electronics.” [Transportation Equipment]
- “Continued tariffs on products utilized in our product lines are being monitored by the business, which is working to mitigate or limit tariff risk. Geopolitical risk, especially in the Middle East, pertaining to commodity and energy markets remains a concern. There has been some increased cost and transit time for rerouted shipments due to conflicts in the Red Sea, Strait of Hormuz and Suez Canal.” [Transportation Equipment]
- “Business is still solid; we will increase revenue by 3 percent to 5 percent. We are considering foreign steel purchases for early next year because domestic steel mills are getting greedy.” [Fabricated Metal Products]
- “No normalcy in sight in the world of metals. It makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in. At least business is better; however, the components of good business are not. Sharp pricing downturns in aluminum will make things more interesting, as supply levels will prevent those decreases from taking hold across the board. Getting customers to understand that is not always easy.” [Primary Metals]
- “The pricing volatility and lead-time extensions in this market are arguably worse than the pandemic era. During COVID-19, we saw a surge of price hikes and inventory buy-ups, which caused constraints that eventually leveled out. We are seeing nothing but consistent upward trends for both pricing and lead times that show no signs of slowing down. Specifically, 5-percent to 25-percent price increases for printed circuit board assembly components and 15-percent to 45-percent increases for bare boards are negatively impacting customer demand outlook into next year. This isn’t sustainable.” [Electrical Equipment, Appliances & Components]
- “Our customers in Asia continue to procure elsewhere to avoid paying a tariff. While the Iran war was paused, it was terrific to see fuel prices (and delivery costs) falling steadily. Now that skirmishes have resumed, we expect fuel to rise again.” [Paper Products]
- “Definitely a downturn within several of our business units, mainly the consumer products division. High freight costs, both for truck and ocean, and longer lead times are concerning. Pricing was moving downward until the Iran war started again.” [Chemical Products]
That’s a mixed bag of comments. AI is booming but price pressures mounting on metals and oil.
Two customers reported chaos is worse than the Covid pandemic.
Commodities Up/Down in Price or in Short Supply
The numbers in parenthesis below are the number of months.
Commodities Up in Price
Acrylonitrile Butadiene Styrene (ABS); Aluminum* (32); Copper (13); Corn; Corrugated Products (4); Electrical Components (2); Electronic Components (7); Freight (5); Fuel* (5); Integrated Circuits; Memory Components (5); Metal Products (4); Ocean Freight (3); Oil Based Products (4); Paper Products (4); Plastic Based Products (4); Plastics (5); Printed Circuit Boards; Resin Based Products; Resins (6); Semiconductors (2); Soybean Meal; Steel (9); Steel — Cold Rolled; Steel — Hot Rolled (7); Steel — Stainless (6); Steel Products (8); and Sulfur Products (4).
Commodities Down in Price
Aluminum(2); Fuel (2); and Polypropylene Resin (2).
Commodities in Short Supply
Aluminum; Copper; Electrical Components (13); Electronic Components (17); Integrated Circuits; Memory (7); Oil Based Products; Printed Circuit Boards; Rare Earth Components; Semiconductors (5); Steel; Steel — Hot Rolled (2); and Tungsten Products.
Aluminum has been up 32 straight months, copper 13, steel 7-9 depending on type. Manufacturers will pass these prices on.
Electrical components and electronic components have been in short supply for 13 and 17 months respectively. This adds to price pressures.
ISM Reported Input Prices
Prices Paid
- March: 59.4% Higher, 2.8% Lower, Index 78.3
- April: 70.3% Higher, 1.2% Lower, Index 84.6
- May: 66.3% Higher, 2.2% Lower, Index 82.1
- June: 66.3% Higher, 2.2% Lower, Index 73.0
- July: 55.1% Higher, 9.2% Lower, Index 71.1
Prices were accelerating higher even before the war in Iran, up 22 straight months.
Even with the MOU pause, now terminated, prices rose in July.
July ISM Synopsis
AI is fueling a boom. There are shortages in AI-related electronic components.
The percentage of ISM respondents reporting higher dropped in July, but that is oil related and the strait is blocked again.
Add it all up and the Fed is behind the curve in hiking interest rates.
Related Posts
July 29, 2026: The Market Tells Fed Chairman Kevin Warsh “You Blew It Already”
The 30-Year Long Bond Yield Is the Highest in 19 Years.
July 30, 2026: Strategic Oil Reserves Down to a Record Low Two-Week Supply
The SPR is the lowest since 1982, but days should be the big concern.
July 31, 2026: How Much Did AI Spending Contribute to Second-Quarter 2026 GDP?
Five charts show the AI impact for every quarter starting 2025 Q1.
Can’t wait to see ISM services showing increasing prices for 110 months. The enrichment and impoverishment of the K-shaped economy continues via deficit spending and now simply “THE PUT” (vs the Fed Put given we now own shares in 30, and counting, corporations and will lament the need to backstop them when the time is near).
Increasing the Monetary Base by 240 billion from Nov. to May, which M2 amplifies into an 876 billion in fresh new money…still seems to work in the short run. Nearly a trillion in new “savings” ex nihilo to lend out. What a nice trick. Who needs real savings?
And the US intervening to rescue the Yen is more money printing. Inflate the can down the road.
This economy has been amazingly robust to recent shocks, many human-made.
The AI surge would be happening in pretty much any state of the world. Oil presumably would be cheaper. The financial sector has a go-go orientation from top-down federal risk-friendly policies, with lax regulation, and new products and markets appearing. Defense rallies sometimes bring long term tech benefits.
So I think headline numbers and risk both are bound to be unusually large. If another financial crash (and COVID was that too) happens, will we have dry powder left to bail it out? That depends on so many globally moving parts, that are moving plenty now.
Outside of that, it is hard for me to imagine large-scale counter-factuals. The wheels keep turning, for now.
many folks are feeling stagflation in prices or things they need like insurance and housing….., and their wages or retirement income………..smells to me like the 1970s and early 80s.
Inflation will be over 4% by the end of the year. Iron clad money back guarantee if it don’t.
“Its Trump turtles all the way down and inflation all the way up!”
But remember, these will be remembered as “good times” inflation days so enjoy them and cherish them. By 2032, you’ll wish you were living in 2026.
This assumes Trump hasn’t blown up the world though so keep that in mind.
in my first 67 years i’ve done better in more turbulent times. with stocks, and r/e and such……..i’d stick around if i were you. you are obviously sharp. the 1990s in old USSR had the most awesome opportunities for enterprising young men to great wealth. same with the r/e blow up in AZ in the 2007 to 2012 crash and burn. i have my passport and escape plan if i get frightened, but i see great opportunities ahead as our empire crumbles. the us bases being attacked and abandoned is a great thing. the empire is over. the world doesn’t fear us anymore. a wonderful thing. good luck sir. i enjoy your inputs.
If I recall right, Hunter S. Thompson looked forward to the 80’s as a “great Darwinian shakeout.” I think it was that, in waves, the rust belt and industrial offshoring wave of descending middle class fortunes (including the 2008 wave) that gave birth to MAGA. Now I wonder if a DSA counter-revolution is forming. I grew up in that golden (Ok, naive) middle class, and it saddens me. But history doesn’t care what I think.
aye aye. only thing left now is for the states to effectively secede as the FEDs go bust and our empire crumbles. i suspect it will mostly a yawn. live in NYS or CA or VT will be a much different experience than those in UT or SC or AZ……….all empires crumble. saw it first hand in 1990s in russia.
Given that Musk’s xAI is now pulling the Trump move of stiffing subs on his data centers, it seems that the edge of expansion is close
Musk isn’t joking so much these days. Remember the 4:25 pot jokes? “Let the DOGE out?” “Let that sink in?” Smoking a joint on video while running the critical satellite and space programs of the USA? All the rotating baby mamas, and so on?
A bunch of the SPCX share lockups unlock Thursday. SPCX and TSLA have already had historic selloffs. Maybe the world just pukes him up. And we can appraise the digestion abilities of the rest of the markets (and their marbled-in credit structures and so forth) for all this AI expansion.
HE’S a freak and asshole. who cares if he’s a cut throat businessman. the worship of these cunts is off the hook.
So does this make you more bullish or does the price pressure leans towards stagflation. Appears that AI boom could last much longer unless interest rates really increase.
It makes me more bullish on inflation and Democrat chances to win the Senate.
Eventually it will hit the stock market.
Atlanta Fed is estimating GDP growth at 6% yet taco wants Warsh to cut interest rates.
That estimate is nonsense.
Forecasts will get better in 1.5 months.