The July 2010 ISM Manufacturing Survey is out and PMI came in at 55.5%. Last month's manufacturing ISM was 56.2%. June ISM manufacturing index declined -3.5% from May's 59.7%. While this is the 12th month for expansion (anything above 50 is an expansion), this is a slowing on the manufacturing ISM. The below graph shows PMI is now back to December 2009 levels.

New orders dropped -5% to 53.5 for July. This is the second month to see a major slowing on new orders, although above 50 is still an expansion. The below graph is normalized to 50, the ISM inflection point for growth and contraction.

Hiring increased to 58.6%, +0.8% higher than last month. Below is the ISM manufacturing employment graph, normalized to zero, so show the Manufacturing ISM employment expansion and hiring trend.

Production, graphed below, normalized to 50, was 57, a decrease of -4.4% from last month, another slowing growth rate. Production corresponds to the Fed's industrial production.

Import purchases slowed. While useful for the trade deficit, if raw materials for manufacturing are not made in the U.S.A., that implies those components cannot be purchased domestically. A sudden drop in imports for raw materials doesn't bode well for finished manufacturing products.

Imports of materials by manufacturers expanded in July as the Imports Index registered 52.5 percent, 4 percentage points lower than the 56.5 reported in June. This is the 11th consecutive month of growth in imports.

The five industries reporting growth in imports during the month of July are: Transportation Equipment; Computer & Electronic Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. The two industries reporting a decrease in imports during July are: Nonmetallic Mineral Products and Primary Metals.

Inventories, in the below graph (normalized to zero), jumped 4.4% to expansion, 50.2%.

The ISM neutral point is 50. Above is growth, below is contraction, although the ISM is this report is noting some variance in the individual indexes (see report). For example, A PMI above 42, over time, also indicates growth.

One thing from the report I find odd, a shortage in:

Capacitors; Electrical Components; and Titanium Dioxide.

Nowadays electronics are made in Asia, especially components and these are the building blocks of many technology products. Perhaps it is not so wise to have the building blocks of so many electronics not be in the U.S., from a manufacturing as well as a national security standpoint.