ISA Distributor Index Falters, Mfg. Rises And PMI Hits 12-Month High

June's readings indicate that the overall industrial economy continues to expand, and at a faster rate for manufacturers and slower for distributors compared to May. See comments from distributors and manufacturers on their thoughts regarding the past month of operations.

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The Industrial Supply Association posted its June Economic Indicator on Wednesday, highlighted by a sizeable drop in ISA's Distributors Index while the Manufacturing and Producer Manufacturing Index had modest gains.

After a sharp 9.4-point increase from April to May, the Distributor Index declined 6.5 points in June to a reading of 60.4. Still, June was the 10th month in the past 12 that the distributor index has been at least 60. Over the past 12 months, its average reading is 62.2.

The ISA Manufacturer Index posted a second-straight monthly gain, rising 2.5 points to 59.1 — its fourth-highest reading over the past year. Over the past 12 months, its average reading is 58.2.

Meanwhile, the Institute of Supply Management's Producer Manufacturing Index (PMI) also had a second-straight monthly gain, rising 1.9 points to 53.2 — its highest reading of the past 12 months. The second-highest reading in that span was July 2015's 52.7. Over the past 12 months, the average PMI reading is 50.5.

For each index, a reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. Thus, June's readings indicate that the overall industrial economy continues to expand, and at a faster rate for manufacturers and slower for distributors.

Distributors indicated declines in new orders, business activity, employment, inventories and sales. They indicated increases in supplier deliveries and anticipated business conditions.

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Here's a collection of comments from industrial distributors that were included in the index:

  • "Overall business seems better and we expect to end the year strong."
  • "June was a disappointment."
  • "We see a little softening but not much. July and December are our poorest months of the year but we then make a strong run August through November Sales start the year by building each month from Jan to June."
  • "An unexpectedly good June as no particular reason for increased activity. July, traditionally as slower month, is already proving to be just that."

And here's a collection of manufacturer comments: 

  • "June was a real solid month. Our Daily sales average was 5 percent higher than April-May and better than 2015."
  • "Consistent New Orders throughout early summer with overall Pipeline building."
  • "June incoming orders improved. Still hard to put together a solid week."
  • "The market is still sluggish making it difficult to sustain any sales momentum which has been the trend all of 2016. Hopefully the market will begin to improve after the July 4th holiday and summer vacations are over."
  • "We are not seeing the anticipated uptick."
  • "We had a great July and are having a wonderful year. Sure there are some quiet moments but month after month we're banging it out and customers are snapping it up. I'm very pleased."
  • "Coming into the summer doldrums. The year began as a continuation of a near record 2015 ... and then it slowed down. Seems as we get nearer the election, industry as a whole is cautious."
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