On July 1, 2008, two organizations — the Institute of Supply Management (ISM) in the United States and CLSA Asia Pacific Markets Purchasing Managers Index (PMI) in China — released their respective indicators of manufacturers' purchasing plans.

In the United States, the index for June unexpectedly increased from 49.6 to 50.2. The 50.2 figure marks a five-month high and is well above the 48.5 expected by the consensus of 78 economists surveyed by Bloomberg.

According to the ISM, the fact that the PMI was over 50 in June indicates that the U.S. manufacturing economy is expanding, despite the collapse of residential construction.

Although increases in production and supplier deliveries pushed the overall U.S. PMI higher in June, the employment index still slipped from 45.5 to 43.7, its lowest value since May 2003.

In contrast to the stronger message on U.S. manufacturing, the China Manufacturing PMI index fell from 54.7 to 53.3 in June 2008.

The 53.3 figure marks a four-month low for the index, primarily due to weakness in production and new orders. However, the fact that the index remained above 50 indicates that buoyant domestic demand ahead of the Beijing Olympics and moderate growth of export orders should keep manufacturing in China moving over the near term.

Although not as weak as in the United States, the manufacturing employment index also declined in China, from 51.1 to 50.1. While more firms reported they were reducing staff because of lower orders and rising costs, most indicated no change in their overall level of staffing.

Although the overall PMI growth indexes in the U.S. and China moved in opposite directions in June, the U.S. ISM and the China PMI inflation indicators sent the same message on prices: manufacturers paid significantly more for commodities in June than they did in May.

Given the sustained pressure on commodity prices globally, this message is unlikely to change much in the near term.