The reading that matters in this morning's US data is not the headline. It is a sub-index most coverage never mentions: what purchasing managers report paying for their inputs compared with the month before. Consensus on the calendar we fetched puts it at 71.0 against a prior reading of 70.3 [1]. A rise there is a cost that arrives on a shelf later, if it arrives at all.
One thing has to be said before any number in this piece is read. The calendar page displayed populated values in its Actual column at a fetch time when these releases had not happened. This desk does not report those values and does not treat them as results. Every figure in this piece is either a consensus forecast or a prior reading, both taken from the calendar's own columns, and nothing here is an outcome.
The slate, as the calendar lists it. The final S&P Global manufacturing reading for July carries a consensus of 53.8 against a prior 53.8. The Institute for Supply Management's manufacturing survey for July follows, with a headline consensus of 53.7 against a prior 54.0, an employment sub-index consensus of 49.8, new orders at 55.4, and prices paid at 71.0 against a prior 70.3. Construction spending for June is forecast at 0.3 percent month over month against 0.2 percent prior [1].
A note on the clock. The calendar lists the S&P Global reading at 1:45 PM and the ISM releases and construction spending at 2:00 PM. Those correspond to the standard 9:45 and 10:00 AM Eastern release slots only if the times are read as UTC, which is how this piece reads them, and it is why the check on all of this comes after ten o'clock Eastern rather than before.
What the number actually is matters for reading it. The ISM headline is a diffusion index, not a measure of output. Purchasing managers are asked whether conditions are better, the same, or worse than the month before, and the index counts the direction of the answers rather than their size. Fifty is the dividing line: above it, more respondents report improvement than deterioration. A fall from 54.0 to 53.7 would not mean factories produced less. It would mean fewer of them said things got better.
That construction is why the employment sub-index is the line with a person attached to it. A consensus of 49.8 sits below 50, which is forecasters saying they expect more manufacturers to be cutting payrolls than adding them. Not by much, and a diffusion index cannot say how many jobs. It can say which way the count is running.
Prices paid works the same way and asks a different question. It counts how many purchasing managers are paying more for materials, components and energy than they were a month ago. A consensus of 71.0 sits more than twenty points above the dividing line, which is a survey in which reports of rising input costs heavily outnumber reports of falling ones. The level is not a rate of inflation and cannot be read as one. That is not a measure of what anybody in a shop pays. It is a measure of pressure entering the system at the far end of it, and whether any of it reaches a household depends on margins, competition and contracts that this release does not touch.
The combination is the reason today's survey is worth more than its headline. A headline easing while input costs firm describes activity cooling and costs rising at the same time. Each half points at a different response. Weak activity is an argument for cheaper money; rising input costs are an argument against it. A release that delivers both leaves the argument exactly where it was, which is a genuine outcome rather than an absence of one.
New orders, forecast at 55.4, is the part of the survey that looks forward: what manufacturers have been asked to build, rather than what they built. A headline drifting down while new orders hold in the mid-fifties would describe a sector with a softer present than pipeline.
Construction spending is the interest-rate-sensitive item on the list, and at a 0.3 percent consensus against 0.2 percent prior it is a monthly percentage on a base the calendar does not print. A single month of that series moves on weather, on public projects landing in one month rather than another, and on revisions to the month before.
The rest of the day carries the plumbing. Three-month and six-month bill auctions are listed at 3:30 PM on the calendar's clock, a senior loan officer survey at 6:00 PM and Treasury refunding financing estimates at 7:00 PM [1]. Total vehicle sales for July appear without a listed time, against a prior of 16.3 million.
What this piece cannot tell you is what any of these numbers came in at, because at the time it was researched none of them had been published. The figures above are what the market expects. The check is at ten o'clock Eastern.
