U.S. Manufacturing Resumes Its Expansion

Aug. 1, 2006

Despite diminished consumer demand, rising interest rates and higher prices for commodities ranging from corrugated boxes to fuel oil, the manufacturing sector of the U.S. economy grew faster last month than it had in June, according to data released ...

John McClenahen

ISM's manufacturing business activity index was 54.7% in July, up nine-tenths of a percentage point from June's 53.8%. A figure above 50% indicates the manufacturing sector generally is expanding; a figure below 50% signals the sector is contracting.

"Manufacturing growth accelerated in July driven by an upswing in production following June's increase in new orders. Employment expanded after a one-month decline, while inventories grew after two months of contraction," noted Norbert J. Ore, chair of ISM's manufacturing business survey committee. "The overall message is that manufacturing is proving to be quite resilient in the face of higher interest rates and weakening consumer spending."

Nevertheless, two elements of the overall manufacturing index bear close watching. ISM's measure of new orders fell 1.8 percentage points in July to 56.1. This means that although new orders last month continued to grow for the 39th consecutive month, the pace was slower than in June.

The second element to watch is ISM's price measure. It was up two percentage points in July, meaning the costs of commodities that manufacturers buy were rising faster last month than in June. "Business remains strong, but higher raw material prices result in reduced margins," said one producer of primary metals.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.