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ISM's Holcomb on July Report: Growing But Decelerating (Audio) · Bloomberg Intelligence

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  Speaker 1: that's a bad business flash. This is taking stock with
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  Speaker 1: Kathleen Hayes and Pim Fox on Bloomberg Radio. The Institute
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  Speaker 1: for Supply Management the US factory sector de'ccelerating modestly in
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  Speaker 1: July but posting a fifth consecutive month of growth. What
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  Speaker 1: does this all mean? Well, that's why we have Brad Holcombe.
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  Speaker 1: He is the chairman of the Institute for Supply Management
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  Speaker 1: and he joins us from Tempe, Arizona. Brad, thanks very
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  Speaker 1: much for being with us. Tell us about new orders
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  Speaker 1: and production. They're both growing, aren't they? Well, they are,
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  Speaker 1: and as you mentioned, the p m I is off
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  Speaker 1: just over a half a point, but still pretty consistent
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  Speaker 1: with what we've seen for the fast few months. New
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  Speaker 1: orders is leading the way at fifty six point nine
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  Speaker 1: is down a tenth of a point, still a very
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  Speaker 1: strong number, supported by a number of our our largest industries.
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  Speaker 1: And production is up seven intensive a point. Uh to
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  Speaker 1: not only keep up with new orders, but it also
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  Speaker 1: had the opportunity to work into the backlog of orders,
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  Speaker 1: which is down four and a half percentage points to
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  Speaker 1: forty eight this month. Well, Brad, you know, bottom line,
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  Speaker 1: as long as the Purchasing Managers Institute that you at
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  Speaker 1: the Institute for Supply Management produced is above fifty, It
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  Speaker 1: signals expansion. And I'm on my Bloomberg now and I'm
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  Speaker 1: you know, scrolling back and scrolling back. I mean, we
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  Speaker 1: haven't been below fifty probably since the the final months
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  Speaker 1: of the Great Recession. And even with the components that,
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  Speaker 1: you know, it's really hard to nickpicky, get nickpicky, except
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  Speaker 1: maybe for you know, the employment component felt just below
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  Speaker 1: fifty because production stayed strong, new orders eased off a bit,
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  Speaker 1: but still well above fifty. Do you see any sign
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  Speaker 1: of a real cooling off here? No, I really don't,
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  Speaker 1: you know, And I really appreciate your comments, because it's
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  Speaker 1: hard to take issue with with the number set today.
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  Speaker 1: It looks a lot like last month, quite frankly, and
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  Speaker 1: as I said, the continuation of the trend for the
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  Speaker 1: last five to seven months on the employment one, you know,
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  Speaker 1: we expected to hang around fifty for the rest of
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  Speaker 1: the year, to end up with zero employment growth between
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  Speaker 1: now and the end of the year. It's just the
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  Speaker 1: way the planning has gone. So there's nothing here that
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  Speaker 1: surprises me this month, and it's it all feels pretty consistent,
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  Speaker 1: as I said, with the trend set up this this
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  Speaker 1: year earlier. Brad does this seem consistent with the most
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  Speaker 1: recent GDP report of one growth. Actually, we would have
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  Speaker 1: you know, correlated and predicted higher between two and a
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  Speaker 1: half percent if we average January through July, and even
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  Speaker 1: three based on the July number. So the rest of
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  Speaker 1: the economy sort of you know, flanged up with us,
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  Speaker 1: we'd be at higher numbers. Well, this is a very
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  Speaker 1: important question Pin puts on the table, because what we've
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  Speaker 1: gotten that GDP report is that the U S economy,
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  Speaker 1: especially after all the revisions going back to is now
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  Speaker 1: growing at a one percent year over year rate. It
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  Speaker 1: is steadily decelerated, even as your I S M index
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  Speaker 1: has held up. Does that mean I S index is
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  Speaker 1: no longer a good indicator for the broad economy or
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  Speaker 1: is it simply that it's just a good indicator for
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  Speaker 1: the part of the economy it makes up, which is
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  Speaker 1: factories manufacturing. Well, that's particularly a good indicator of the
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  Speaker 1: manufacturing sector. But also, you know, in a couple of
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  Speaker 1: days we'll all see the non manufacturing report, and then
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  Speaker 1: together we represent the entire GDP from our perspective, and
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  Speaker 1: that is about seven professionals sitting in plants and and
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  Speaker 1: service companies across the company telling us actually what it
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  Speaker 1: looks like from inside the government numbers. You know, I'm
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  Speaker 1: not familiar with the process the revised from time to time.
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  Speaker 1: We rarely have ever do that. So this is is,
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  Speaker 1: you know, his real data race based on a pretty
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  Speaker 1: broad survey, Bradam money, If you could tell us what
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  Speaker 1: some of the respondents have said to you, particularly if
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  Speaker 1: you'd like to begin with the plastics and rubber products,
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  Speaker 1: they seem to be a bit more optimistic. That's a
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  Speaker 1: plastic guests, plastic and rubber products industry. One of the
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  Speaker 1: comments was, seems to be a bit more optimistic in
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  Speaker 1: the markets, but US presidential race might dampen the mood.
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  Speaker 1: Um personally, I don't necessarily agree with that. I think
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  Speaker 1: we've all factored that in. It is what it is.
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  Speaker 1: It's going to be one or the other, you know,
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  Speaker 1: and we'll see later on what that means. Brad. Going
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  Speaker 1: back again to the g P report, almost everything was negative. Um.
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  Speaker 1: Certainly any kind of construction, any kind of private investment
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  Speaker 1: was down. Another reason why it's kind of interesting and
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  Speaker 1: surprising maybe to see factories holding up so well, But
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  Speaker 1: exports were also a small positive contributor. What which which
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  Speaker 1: companies that you survey who's doing well. On the exports side,
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  Speaker 1: exports is finished goods, um, so it covers you know,
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  Speaker 1: as pretty broad and let me just turn to that
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  Speaker 1: particular page. But again, exports is UH is finished goods,
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  Speaker 1: whereas imports as raw materials. And in terms of what's uh,
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  Speaker 1: what's going and growing, paper products, computer and electronic products,
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  Speaker 1: fabricated metal products, food, beverage and tobacco, and transportation equipment
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  Speaker 1: as well as chemical products are on that list of
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  Speaker 1: growing in that category, Pratt just quickly. Commodities moving higher
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  Speaker 1: in price include copper that should be good for the
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  Speaker 1: industrial sector. Now well, yes, um, you know copper is
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  Speaker 1: actually on both lists up in price and down and
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  Speaker 1: price as indicated by different respondents. It could be a
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  Speaker 1: timing issue, but generally speaking, the medals are going up
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  Speaker 1: in this time frame, all right, Brad Hope, and thank
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  Speaker 1: you so very much for joining us. From the Institute
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  Speaker 1: for Supply Management putting on its Purchasers Purchasing Managers Index.
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  Speaker 1: It's basically an index of manufacturing growing for the fifth
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  Speaker 1: straight month but decelerating. This is Bloomberg coming up on
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  Speaker 1: taking stock. A look at Cantel Medical corp On the
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  Speaker 1: future plans for the company as a new CEO takes
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  Speaker 1: over