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ISM's Holcomb: All Indices Pointing in Right Direction (Audio) · Bloomberg Intelligence

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  Speaker 1: Institute for Supply Management said that US manufacturing expanded for
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  Speaker 1: new orders and production improved. Separately, the Commerce Department said
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  Speaker 1: And that's a Bloomberg business flash. You're listening to taking
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  Speaker 1: US manufacturing looked like on the headline anyway, that it
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  Speaker 1: had a pretty good month in June. In fact, as
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  Speaker 1: a Bloomberg reports today, the fastest pace of expansion in
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  Speaker 1: more than a year. When you look at the latest
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  Speaker 1: survey from the Institute for Supply Management, They're key index
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  Speaker 1: rose to fifty three point to last month. That's above fifty,
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  Speaker 1: so it's above the level that signals that manufacturing is expanding.
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  Speaker 1: It's up from fifty one point three in May, so
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  Speaker 1: that's all good news. At the same time, the i
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  Speaker 1: s M had a special survey asking the purchasing managers
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  Speaker 1: it surveys across the country if they are concerned about Brexit,
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  Speaker 1: are they seeing any impact on orders for US manufactured
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  Speaker 1: goods and more? Joining us to dive into this very
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  Speaker 1: important question now, Brad Holcom, he's chairman of the Manufacturing
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  Speaker 1: Business Survey Committee at the I S and Brad, welcome back.
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  Speaker 1: Thank you very much, and happy fourth of July to
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  Speaker 1: you and everyone. I will I will say thank you
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  Speaker 1: into you two and of course all our listends of
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  Speaker 1: a lovely holiday we're celebrating this weekend. I actually want
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  Speaker 1: to start with a special question, Brad, why did you
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  Speaker 1: decide to issue a special question to the people in
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  Speaker 1: your survey? Well, we felt that this was potentially monumental
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  Speaker 1: and deserving of a special look at that question, I
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  Speaker 1: think it's surprised most and so we went up to
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  Speaker 1: our two panels, both on the manufacturing and non manufacturing side,
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  Speaker 1: with a series of questions related to Brexit specifically, what
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  Speaker 1: did you ask them? We asked them about, uh, their
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  Speaker 1: their view, initial view of the net financial impact of Brexit,
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  Speaker 1: and then some details around what might be the areas
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  Speaker 1: of concerns such as financial market uncertainty, currency movement, global
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  Speaker 1: growth and so on. Okay, and these are we might
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  Speaker 1: even think it's early days too for manufacturers to see
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  Speaker 1: an impact, but I guess after all the volatility that
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  Speaker 1: we see, maybe they're concerned about that. What did you
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  Speaker 1: What did they say? What is the majority of view
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  Speaker 1: or is there one? Well? Half a step back. The
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  Speaker 1: current monthly report that we'll get to was largely collected
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  Speaker 1: before the Brexit announcement, and so we'll talk about that later.
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  Speaker 1: So this special question, the upshot of it is, when
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  Speaker 1: asked about the net financial impact manufacturing eight percent at
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  Speaker 1: a negligible impact, a slightly negative impact, seven per cent
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  Speaker 1: negative on the flip side, set a slightly positive impact,
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  Speaker 1: so on the whole negative, negligible to slightly negative in
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  Speaker 1: terms of financial impact. And of course, with the basic
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  Speaker 1: question of basic worry, I guess would be that there
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  Speaker 1: will be a drop in export orders because economies overseas
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  Speaker 1: will be weak, and that will hurt the demand. Now,
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  Speaker 1: new export orders, one of the sub indexes of the
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  Speaker 1: I s M index, rose actually fifty three point five
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  Speaker 1: in June from fifty two point five in May. We
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  Speaker 1: also saw somewhat higher production, somewhat higher new orders, even employment.
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  Speaker 1: That number rose above fifty for the first time since
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  Speaker 1: November of last year. You know, virtually all the indexes
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  Speaker 1: are pointing in the right direction. New orders you mentioned
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  Speaker 1: at fifty seven point zero is the highest since December
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  Speaker 1: of fourteen, and production at fifty four point seven is
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  Speaker 1: the highest since July fIF So the three indexes, including
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  Speaker 1: p m I, have reached highs for a year to
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  Speaker 1: year and a half time frame. What's driving it? I
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  Speaker 1: think it's building on the momentum that we've seen for
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  Speaker 1: the last four to four to six months. In the
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  Speaker 1: case of the p m I, it's been growing consecutively
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  Speaker 1: for four consecutive months, new orders and production for six
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  Speaker 1: consecutive months each. And that follows a five month period
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  Speaker 1: of a down draft where the p m I was
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  Speaker 1: below fifty. So we turned the corner and moving forward,
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  Speaker 1: and it looks like we've got some some momentum here.
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  Speaker 1: So Brad Stanley Fisher, who's Vice chair of the Federal Reserve,
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  Speaker 1: spoke today and he indicated that the FED probably needs
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  Speaker 1: to wait and see what the impact of briggs it
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  Speaker 1: is on the global economy on the US economy for
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  Speaker 1: it starts making any move on rates. Uh. Do you
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  Speaker 1: agree with that? Do you think the Fed should actually,
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  Speaker 1: if manufacturing is doing reasonably well, should the Fed be
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  Speaker 1: considering another interest rate increase this summer or this fall? Well?
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  Speaker 1: I agree that we all need to kind of wait
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  Speaker 1: and see. Even even our special report and questionnaire gathers
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  Speaker 1: their initial view really in the in the early days
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  Speaker 1: of this situation, and we've already seen the stock market recover,
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  Speaker 1: so we might get a slightly different answer if we
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  Speaker 1: were to pull today. So the real answer is we
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  Speaker 1: don't know. But it could go up down our sideways
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  Speaker 1: in the short term. In the long term it certainly
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  Speaker 1: could mean, uh, you know, greater competitiveness in the UK,
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  Speaker 1: throughout Europe and globally as well. So um, in terms
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  Speaker 1: of growth, what kind of growth does this signal your
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  Speaker 1: your index of manufacturing? And next, because a lot of
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  Speaker 1: people been wondering if there aren't some signs of recession
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  Speaker 1: right now in the US economy, Well, let's let's first
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  Speaker 1: say that the economy has been growing for eighty five
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  Speaker 1: consecutive months according to our statistics and our correlations, and
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  Speaker 1: this year the average p m I has been fifty
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  Speaker 1: point eight with corresponds to two point increase in real GDP,
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  Speaker 1: and this month annualized at fifty two point three point
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  Speaker 1: two would correspond to a three point two So we're
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  Speaker 1: in the two to three percent area, uh, in terms
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  Speaker 1: of the g d P. Brad Holcombe, thank you so
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  Speaker 1: very much. From the Institute for Supply Management, This is
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