Manufacturing Survey Shows Worsening Inflation Worries

The latest manufacturing survey from the Institute for Supply Management (ISM) shows that inflation worries are worse than during the Covid-19 pandemic, adding pressure on the Federal Reserve to raise interest rates.

The ISM's July survey reported a 55.6 reading, the fastest pace of growth in more than four years, beating Wall Street expectations of 54.0. This marks the best performance since May 2022 and is above the threshold of 50, indicating expansion.

Strong gains were seen in new export orders, backlogs, and production, with a 6.3-point spike in production. The employment gauge hit its highest level since August 2022 and marked an expansion for the first time in 33 months.

However, concerns lurked beneath the surface as nearly three-quarters of respondents reported higher prices, marking the 22nd consecutive month of price increases. Industry leaders expressed frustration with the volatile environment, citing the Iran war and tariffs as sources of uncertainty.