Manufacturing growth remains strong with an overall index of 51.7 (anything above 50 is growth), and the results are stronger than initially predicted by the financial media (Wall Street).
The manufacturing production index for June is 54.1 versus last month’s 51.3 (May); generally this means manufacturing outputs are growing, order backlogs are being reduced, orders are being fulfilled faster. This is an indication that new production investment is now coming on-line and delivering actual products from orders.
Within the review there are particular notes for additional interest. First, the June manufacturing employment index is 54.5, very strong; (last month 53.7). In essence manufacturers are hiring at a fast rate. One cause is better weather (seasonal), and the majority cause is filling the jobs from new production facilities coming on-line.
Secondly, and very interestingly, the June price index is 47.9 (deflation) and reflects a very significant drop in manufacturing material prices from May’s 53.2 index. This is exactly the opposite result of what all financial media were claiming would happen based on tariff predictions. The prices of manufacturing materials are lower in June, significantly lower, which will ultimately mean no higher consumer prices.
A key point to note is how lower prices are not driven by excess inventory. The inventory index in June is 49.1 (lower than May’s 50.9). So it’s the actual material cost and production efficiencies driving lower manufacturing prices.
China is paying the tariff, and getting more and more anxious about the trade war that they didn't think Trump had the huevos to start. He's winning, the American economy and Main Street is winning, the treasury is winning, and our enemies are losing. Winning.
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