WEBVTT - ISM's Holcomb on July Report: Growing But Decelerating (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>This is a Bloomberg business flash from Bloomberg World Headquarters.

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<v Speaker 1>Charlie held out the down in SMP both lower, NEZ

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<v Speaker 1>SNAK is higher up four tens of one percent. We've

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<v Speaker 1>got the tenure down eleven thirty seconds. That yield one

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<v Speaker 1>point four nine percent gold up to sixty ounce. The

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<v Speaker 1>thirteen fifty five a game there are two tens of

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<v Speaker 1>one percent. Stocks of being a move to lower via

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<v Speaker 1>a route in energy producers. Crude oil plunging through forty

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<v Speaker 1>of barrel for the first time since April. Crude is

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<v Speaker 1>now down four percent at thirty nine ninety two, a

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<v Speaker 1>drop right now of a dollar sixty eight a barrel

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<v Speaker 1>on West Texas Intermediate SMP down three to one seventy

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<v Speaker 1>had dropped there of two tens of one percent. The

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<v Speaker 1>down down thirty nine points, have got there of two

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<v Speaker 1>tens of one percent. NAZ stack up nineteen a gain

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<v Speaker 1>of four tens of one percent. I'm Charlie Pellett, and

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<v Speaker 1>that's a bad business flash. This is taking stock with

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<v Speaker 1>Kathleen Hayes and Pim Fox on Bloomberg Radio. The Institute

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<v Speaker 1>for Supply Management the US factory sector de'ccelerating modestly in

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<v Speaker 1>July but posting a fifth consecutive month of growth. What

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<v Speaker 1>does this all mean? Well, that's why we have Brad Holcombe.

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<v Speaker 1>He is the chairman of the Institute for Supply Management

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<v Speaker 1>and he joins us from Tempe, Arizona. Brad, thanks very

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<v Speaker 1>much for being with us. Tell us about new orders

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<v Speaker 1>and production. They're both growing, aren't they? Well, they are,

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<v Speaker 1>and as you mentioned, the p m I is off

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<v Speaker 1>just over a half a point, but still pretty consistent

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<v Speaker 1>with what we've seen for the fast few months. New

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<v Speaker 1>orders is leading the way at fifty six point nine

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<v Speaker 1>is down a tenth of a point, still a very

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<v Speaker 1>strong number, supported by a number of our our largest industries.

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<v Speaker 1>And production is up seven intensive a point. Uh to

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<v Speaker 1>not only keep up with new orders, but it also

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<v Speaker 1>had the opportunity to work into the backlog of orders,

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<v Speaker 1>which is down four and a half percentage points to

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<v Speaker 1>forty eight this month. Well, Brad, you know, bottom line,

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<v Speaker 1>as long as the Purchasing Managers Institute that you at

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<v Speaker 1>the Institute for Supply Management produced is above fifty, It

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<v Speaker 1>signals expansion. And I'm on my Bloomberg now and I'm

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<v Speaker 1>you know, scrolling back and scrolling back. I mean, we

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<v Speaker 1>haven't been below fifty probably since the the final months

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<v Speaker 1>of the Great Recession. And even with the components that,

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<v Speaker 1>you know, it's really hard to nickpicky, get nickpicky, except

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<v Speaker 1>maybe for you know, the employment component felt just below

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<v Speaker 1>fifty because production stayed strong, new orders eased off a bit,

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<v Speaker 1>but still well above fifty. Do you see any sign

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<v Speaker 1>of a real cooling off here? No, I really don't,

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<v Speaker 1>you know, And I really appreciate your comments, because it's

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<v Speaker 1>hard to take issue with with the number set today.

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<v Speaker 1>It looks a lot like last month, quite frankly, and

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<v Speaker 1>as I said, the continuation of the trend for the

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<v Speaker 1>last five to seven months on the employment one, you know,

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<v Speaker 1>we expected to hang around fifty for the rest of

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<v Speaker 1>the year, to end up with zero employment growth between

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<v Speaker 1>now and the end of the year. It's just the

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<v Speaker 1>way the planning has gone. So there's nothing here that

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<v Speaker 1>surprises me this month, and it's it all feels pretty consistent,

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<v Speaker 1>as I said, with the trend set up this this

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<v Speaker 1>year earlier. Brad does this seem consistent with the most

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<v Speaker 1>recent GDP report of one growth. Actually, we would have

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<v Speaker 1>you know, correlated and predicted higher between two and a

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<v Speaker 1>half percent if we average January through July, and even

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<v Speaker 1>three based on the July number. So the rest of

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<v Speaker 1>the economy sort of you know, flanged up with us,

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<v Speaker 1>we'd be at higher numbers. Well, this is a very

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<v Speaker 1>important question Pin puts on the table, because what we've

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<v Speaker 1>gotten that GDP report is that the U S economy,

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<v Speaker 1>especially after all the revisions going back to is now

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<v Speaker 1>growing at a one percent year over year rate. It

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<v Speaker 1>is steadily decelerated, even as your I S M index

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<v Speaker 1>has held up. Does that mean I S index is

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<v Speaker 1>no longer a good indicator for the broad economy or

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<v Speaker 1>is it simply that it's just a good indicator for

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<v Speaker 1>the part of the economy it makes up, which is

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<v Speaker 1>factories manufacturing. Well, that's particularly a good indicator of the

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<v Speaker 1>manufacturing sector. But also, you know, in a couple of

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<v Speaker 1>days we'll all see the non manufacturing report, and then

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<v Speaker 1>together we represent the entire GDP from our perspective, and

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<v Speaker 1>that is about seven professionals sitting in plants and and

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<v Speaker 1>service companies across the company telling us actually what it

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<v Speaker 1>looks like from inside the government numbers. You know, I'm

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<v Speaker 1>not familiar with the process the revised from time to time.

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<v Speaker 1>We rarely have ever do that. So this is is,

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<v Speaker 1>you know, his real data race based on a pretty

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<v Speaker 1>broad survey, Bradam money, If you could tell us what

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<v Speaker 1>some of the respondents have said to you, particularly if

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<v Speaker 1>you'd like to begin with the plastics and rubber products,

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<v Speaker 1>they seem to be a bit more optimistic. That's a

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<v Speaker 1>plastic guests, plastic and rubber products industry. One of the

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<v Speaker 1>comments was, seems to be a bit more optimistic in

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<v Speaker 1>the markets, but US presidential race might dampen the mood.

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<v Speaker 1>Um personally, I don't necessarily agree with that. I think

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<v Speaker 1>we've all factored that in. It is what it is.

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<v Speaker 1>It's going to be one or the other, you know,

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<v Speaker 1>and we'll see later on what that means. Brad. Going

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<v Speaker 1>back again to the g P report, almost everything was negative. Um.

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<v Speaker 1>Certainly any kind of construction, any kind of private investment

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<v Speaker 1>was down. Another reason why it's kind of interesting and

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<v Speaker 1>surprising maybe to see factories holding up so well, But

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<v Speaker 1>exports were also a small positive contributor. What which which

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<v Speaker 1>companies that you survey who's doing well. On the exports side,

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<v Speaker 1>exports is finished goods, um, so it covers you know,

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<v Speaker 1>as pretty broad and let me just turn to that

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<v Speaker 1>particular page. But again, exports is UH is finished goods,

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<v Speaker 1>whereas imports as raw materials. And in terms of what's uh,

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<v Speaker 1>what's going and growing, paper products, computer and electronic products,

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<v Speaker 1>fabricated metal products, food, beverage and tobacco, and transportation equipment

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<v Speaker 1>as well as chemical products are on that list of

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<v Speaker 1>growing in that category, Pratt just quickly. Commodities moving higher

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<v Speaker 1>in price include copper that should be good for the

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<v Speaker 1>industrial sector. Now well, yes, um, you know copper is

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<v Speaker 1>actually on both lists up in price and down and

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<v Speaker 1>price as indicated by different respondents. It could be a

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<v Speaker 1>timing issue, but generally speaking, the medals are going up

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<v Speaker 1>in this time frame, all right, Brad Hope, and thank

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<v Speaker 1>you so very much for joining us. From the Institute

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<v Speaker 1>for Supply Management putting on its Purchasers Purchasing Managers Index.

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<v Speaker 1>It's basically an index of manufacturing growing for the fifth

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<v Speaker 1>straight month but decelerating. This is Bloomberg coming up on

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<v Speaker 1>taking stock. A look at Cantel Medical corp On the

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<v Speaker 1>future plans for the company as a new CEO takes

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<v Speaker 1>over