- Before was 53.0
- Prices paid 60.0 vs. 75.0 expected (previously 78.5) – fourth biggest drop ever
- Production 53.5 compared to 54.9 before
- Employment 49.9 compared to 47.3 before
- New orders 48.0 vs. 49.2
It all depends on the price paid. I don’t understand why the consensus was so high. The price component measures delta, so a decline indicates a slower pace of price increases, which makes sense to me given what has happened in commodities. In any case, this report is what the Fed would have hoped to see.
“The slowdown in price increases is due to (1) volatility in energy markets, (2) slowdown in copper, steel, aluminum and corrugated markets and (3) a significant drop in demand for chemicals. Notably, 21.5% of respondents said they paid lower prices in July, compared to 8.3% in June,” the report said.
On the other hand, new orders should be a bit of a concern. There’s a notable comment below about companies cutting inventory for fear of recession. This stuff can become self-fulfilling.
Comments in the report:
- “Significant extended lead times always affect business, and the difficult labor market is also a significant factor. The order book is healthy; we simply cannot deliver to customers due to hardware issues. » [Computer & Electronic Products]
- “Inflation slows down activity. Overstock of raw materials due to past supply chain issues and slowing of orders. » [Chemical Products]
- “Chip shortages persist; however, China’s COVID-19 lockdowns present even worse supply issues. [Transportation Equipment]
- “Growth inflation pushes a stronger narrative around impending recession concerns. Many customers seem to be withdrawing their orders in an effort to reduce inventory. » [Food, Beverage & Tobacco Products]
- “New order hall slowed down slightly; however, the logistical issues still need to improve. Long lead times for materials and labor shortages remain a major problem. [Machinery]
- “Our markets are still holding; however, I believe a downturn is ahead. We are cautious about going overboard with orders. Also, I believe the general market is at the start of a recession. [Fabricated Metal Products]
- “All markets are extremely busy but face headwinds that will eventually take their toll. Time and cost make large projects very difficult to budget, plan and execute. Routine work is also very difficult. [Nonmetallic Mineral Products]
- “Current order books are full, but there have been signs of a slowdown from the fourth quarter onwards.” [Plastics & Rubber Products]
- “Slight improvement expected for our business for the next quarter.” [Primary Metals]
- “Continued delivery and personnel issues have eaten into the bottom line.” [Textile Mills]