US ISM PMI had shown great improvement in July.

 

The July PMI (54.2, +1.6) had continued to improve because of pandemic relief packages implemented worldwide including the US ($600 per week). This had resulted in the new order including the new export and local orders rising altogether and pushed up the prices to 53.2 (+1.9). Thus, the producers ramped up their production (62.1, +4.8) to meet the rising new orders while the customers’ inventories were reduced by fulfilling the rising orders.

All in all, the improvement in the July PMI showed that the worldwide pandemic relief packages were helping to boost some consumer spendings. However, the real test will be whether the consumer spendings will be sustainable without the pandemic relief packages and also the re-surging COVID outbreak situation.

If the US can continue the pandemic relief money and contain the deteriorating outbreak, the US GDP will rebound in Q3.