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The facade of the New York Stock Exchange (NYSE) is pictured before the closing bell in New York City on April 8, 2026.
\nCHARLY TRIBALLEAU\/AFP via Getty Images<\/p>\n
The July flash PMI came in at 53.6, beating the 52.2 estimate<\/a>, marking the composite index’s strongest reading in eight months, and pointing to annualized GDP growth of roughly 2%. But the number that should sit at the center of every technology CFO’s procurement conversation this week isn’t 53.6. It’s 11 \u2014 as in 11 consecutive months in which US manufacturer supplier delivery times have worsened, now at their most severe in nearly four years. Behind the strong headline is a supply-chain deterioration that is accelerating, not reversing, driven by a Strait of Hormuz conflict that has rerouted global shipping around the Cape of Good Hope<\/a> and driven war-risk insurance premiums to four times their pre-conflict level.<\/p>\n The July data from S&P Global, released July 30 and based on flash survey responses collected earlier in the month, confirmed that the US private sector opened the third quarter on firmer footing<\/a> than the second \u2014 which cleared only a modest bar after GDP growth tracked at a 1.2% annualized pace in Q2. Growth was real, but the sources of it \u2014 event-driven consumer spending tied to the FIFA World Cup and an unusually strong July Fourth \u2014 carry no guarantee of August persistence. The supply-chain signal underneath the headline does not have the same shelf life; it has been building for nearly a year and, according to the report’s own chief economist, just got worse.<\/p>\n Services Surge on Seasonal Tailwinds While Manufacturing Stalls<\/p>\n July’s expansion was entirely a services story. Business activity in the sector climbed to an eight-month high<\/a> as new order inflows strengthened. Firms reported a measurable lift from FIFA World Cup-related spending, stronger-than-usual July 4th activity, and increased investment in sales, marketing, and product development \u2014 catalysts that are visible, dateable, and temporary.<\/p>\n Manufacturing told a different story. Factories reported their weakest gains in output and order books since March.<\/a> The divergence is significant: for nine months heading into July, the goods-producing sector had outpaced services on a relative basis. That outperformance has now evaporated. Rates of expansion across manufacturing and services have equalized \u2014 and with manufacturing decelerating while services are propped up by calendar-driven spending, the July composite’s apparent strength rests on fragile supports.<\/p>\n Exports of goods and services continued to fall in July,<\/a> underscoring that the US economy’s current momentum depends almost entirely on domestic demand rather than on international competitiveness. For manufacturers that had been building safety stocks ahead of anticipated component shortages, fewer such reports in July helped explain the soft output readings \u2014 the inventory front-running is fading, and what replaces it will depend on whether the underlying delivery-time situation improves.<\/p>\n Why Do 11 Months of Worsening Delivery Times Matter for Technology Hardware?<\/p>\n Understanding why the delivery-time sub-index warrants more attention than the composite headline requires a brief look at how the PMI is constructed. It is a diffusion index<\/a>: every month, purchasing managers are asked whether conditions across five variables \u2014 new orders, output, employment, inventories, and delivery times \u2014 are better, the same, or worse than the prior month. The composite figure reflects improvement vs. deterioration across those categories. But the delivery-time sub-index works inversely from the others: longer delivery times represent a worsening condition, so the sub-index falls when delays lengthen. A reading below 50 on the delivery-time sub-index means more purchasing managers are reporting longer waits than shorter ones.<\/p>\n The July data showed the sharpest lengthening of supplier delivery times since August 2022 \u2014 and this is the 11th consecutive month<\/a> in which the sub-index has been in that territory. That is not noise. An 11-month streak represents a structural state, not a transient shock.<\/p>\n The Strait of Hormuz is the primary reason. On February 28, 2026, following US and Israeli strikes on Iran, the Islamic Revolutionary Guard Corps issued warnings prohibiting vessel passage through the strait. Hapag-Lloyd, Maersk, CMA CGM, and MSC \u2014 the four carriers that collectively dominate global container shipping \u2014 formally suspended Hormuz transits within 48 hours<\/a>. Vessels were rerouted around the Cape of Good Hope, adding 10 to 14 days to Asia-to-US and Middle East-to-US routes.<\/p>\n The technology-specific consequence is less visible in the energy headlines but more durable in its effects on manufacturing costs: the Middle East is a primary supplier of helium (used as a cooling gas in chip fabrication), bromine (used in flame retardants and circuit board manufacturing), aluminum, and sulfur (used in semiconductor processing). These inputs are not interchangeable on short notice. Dun & Bradstreet maritime container booking data confirmed that more than 44,000 businesses across 174 economies<\/a> had at least one shipment exposed to the Hormuz disruption as of mid-March. The technology-sector supply-chain consequences<\/a> for US manufacturers compound with tariff-related availability issues to create the 11-month delivery-time deterioration the PMI is now measuring.<\/p>\n Inflation: When Good Numbers Hide a Worsening Direction<\/p>\n The PMI’s price data is where the headline growth story collides most sharply with the underlying reality. Input cost inflation for the private sector rose in July to its highest level since May 2025, with cooler manufacturing cost growth more than offset by a 14-month high in services input costs.<\/a> Companies attributed the pressure to elevated energy and shipping prices, tariffs, and broad-based supplier price increases \u2014 the same forces that lengthened delivery times.<\/p>\n On the output side, selling-price inflation accelerated to its steepest pace since July 2022.<\/a> Factory gate inflation remained sharp even as it moderated slightly; services charge inflation climbed to its highest level in just under four years. This is a cost-push inflation picture: supply disruptions and elevated energy costs flow through business cost structures and arrive at the consumer as higher prices. For the Federal Reserve \u2014 which held rates at 3.50%-3.75% in a 9-3 vote on July 29, with three regional presidents dissenting<\/a> in favor of an immediate hike \u2014 the July PMI selling-price reading is the kind of data that gives the hawks the evidence they need for September.<\/p>\n How Does Warsh Read Supply-Side Inflation? The September Meeting Depends on It<\/p>\n The three July dissenters \u2014 Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan \u2014 voted for an immediate 25-basis-point increase, the most unified hawkish dissent since September 2016.<\/a> Their argument rests on a reading of inflation as persistent and wage-driven, requiring monetary restraint to cool. The PMI’s 14-month high in services input costs and four-year high in services charge inflation fits that thesis directly.<\/p>\n The majority, however, is waiting on the July CPI print (due August 12) and August CPI before committing to September action. Ian Lyngen at BMO Capital Markets described the current stance<\/a> as a committee with vocal hawks whose majority is “siding with Warsh to keep rates stable until at least September.” Goldman Sachs Asset Management’s Kay Haigh characterized September as “finely balanced, with any further action likely dependent on a combination of developments<\/a> in the Middle East and the next two CPI prints.”<\/p>\n This matters for technology sector planning because the Fed’s primary tool affects two different cost channels simultaneously: variable-rate debt costs (credit cards, HELOCs, adjustable-rate mortgages) and the long-duration borrowing rates that govern how cheaply hyperscalers can issue bonds for datacenter construction. A September 25-basis-point hike, combined with four-year-high selling-price inflation, would compress AI infrastructure economics from both ends.<\/p>\n What Warmer Business Expectations Cannot Offset<\/p>\n Business output expectations improved in July to an eight-month high.<\/a> But that optimism is split along the same fault line visible in the output data. Services firms reported their strongest 12-month outlook since last September, aided partly by lower energy prices that had previously squeezed consumer spending power. Manufacturing optimism slipped to its lowest since last October, reflecting weaker demand growth, global trade concerns, geopolitical risk, tariffs, and high costs.<\/p>\n Employment returned to marginal growth in July after two months of contraction<\/a> \u2014 positive directionally, but constrained. High costs and an uncertain trading environment restrained hiring; firms often chose not to replace workers who left rather than adding headcount. The return to positive employment territory reflects hiring firms’ confidence in the July data, but the magnitude of the recovery falls well short of what would signal a broad-based labor market resurgence.<\/p>\n Chris Williamson, S&P Global’s chief business economist and author of the PMI release, issued an unusually direct assessment. The July PMI, he wrote, may be distorted by hospitality spending tied to special events, and the more concerning reading in the data is the “intensification of supply chain delays and accompanying renewed upturn in price pressures, constraining growth and subduing demand.”<\/a> He added that “events over recent days in the Middle East will have only further exacerbated these supply chain and price worries<\/a> and raise downside risks to the near-term outlook for the economy, hinting that July’s upturn may not be the start of an improving trend.”<\/p>\n What This Means for Tech Investors and Procurement Teams<\/p>\n For technology sector investors, the July PMI contains three actionable signals.<\/p>\n First, the supply-chain signal is structurally more important than the headline. Eleven months of worsening delivery times at a near-four-year worst translates directly into longer procurement cycles, higher component costs, and increased inventory carrying costs across hardware manufacturing and anything adjacent to it. For companies sourcing semiconductors, precision components, or materials that transit Middle Eastern supply routes, the delivery-time streak is a leading indicator \u2014 and it has been pointing in one direction for nearly a year.<\/p>\n Second, the services sector’s relative strength carries a built-in expiration problem. The July consumption boost from FIFA World Cup and July Fourth spending will not reappear in August data. If services activity reverts toward June levels, the composite PMI loses its primary source of upward pressure \u2014 and manufacturing, already decelerating, provides no offset.<\/p>\n Third, and most directly consequential for the AI infrastructure buildout that defines 2026’s dominant technology capital-expenditure narrative: the 11-month delivery-time streak compounds the rate-risk that September’s potential hike creates.<\/a> AI datacenter construction depends on components sourced through the exact supply chains the PMI’s delivery-time sub-index is measuring. When delivery times lengthen for 11 months and selling-price inflation accelerates to a four-year high simultaneously, the economics of AI infrastructure face simultaneous pressure from input-cost inflation on one side and potential rate increases on the other. That is a more precise version of the risk than the headline PMI number suggests.<\/p>\n Frequently Asked QuestionsHow does the PMI delivery-time sub-index work, and why does a lower reading mean worse conditions?<\/p>\n The PMI is a diffusion index \u2014 purchasing managers are asked each month whether specific conditions are better, the same, or worse than the prior month. For most PMI sub-indexes, a reading above 50 means conditions are improving. The delivery-time sub-index is the exception: because longer delivery times represent a worsening condition for manufacturers, the index is inverted. A reading below 50 means more purchasing managers reported lengthening delivery times than shortening ones. July’s data showed the sharpest lengthening since August 2022, and the sub-index has been below 50 for 11 consecutive months<\/a> \u2014 meaning conditions have worsened every single month since the Strait of Hormuz disruption began in February 2026.<\/p>\n Why does the Strait of Hormuz matter specifically to US technology manufacturers?<\/p>\n The strait is the world’s most critical maritime chokepoint, handling approximately 25% of the world’s maritime oil trade and 20% of global LNG \u2014 but its relevance for technology companies extends beyond energy. The Middle East is also a primary source of helium (essential for semiconductor fabrication cooling), bromine (used in electronics flame retardants), aluminum, and sulfur. Since the effective closure of the strait on February 28, 2026, major shipping carriers rerouted around the Cape of Good Hope, adding 10 to 14 days to delivery times and driving war-risk insurance premiums to four times pre-conflict levels.<\/a> More than 44,000 businesses across 174 economies had direct shipping exposure as of mid-March.<\/a><\/p>\n Will the Federal Reserve raise interest rates at its September 2026 meeting?<\/p>\n Markets currently assign a probability above 50% to a September hike following the July FOMC decision, in which three regional presidents \u2014 Beth Hammack, Neel Kashkari, and Lorie Logan \u2014 dissented in favor of an immediate increase,<\/a> the most unified hawkish dissent since September 2016. The July PMI’s four-year high in services selling-price inflation strengthens the hawks’ case. The majority of the committee is waiting on the July CPI report (due August 12) and August CPI before committing. Chair Kevin Warsh is expected to speak at the Jackson Hole symposium August 27-29, which markets will read for signals ahead of the September 15-16 meeting.<\/a><\/p>\n What should technology procurement teams do differently given this data?<\/p>\n This article does not constitute investment or procurement advice. However, the July PMI delivery-time data points directly to a trend procurement teams can verify in their own order data: 11 months of worsening delivery times from suppliers correlates with longer lead times and higher component costs. Procurement managers sourcing semiconductors, precision hardware, or materials with Middle Eastern supply-chain exposure may find it useful to compare internal lead times against this PMI signal as a benchmarking exercise, and to factor the ongoing Hormuz disruption into forward inventory planning. A financial or supply-chain advisor can help assess organization-specific exposure.<\/p>\n","protected":false},"excerpt":{"rendered":"The facade of the New York Stock Exchange (NYSE) is pictured before the closing bell in New York…\n","protected":false},"author":2,"featured_media":570930,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114,4318,85,932,4486,46,29131,257175,258105,4872,258104],"class_list":["post-570929","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-federal-reserve","tag-il","tag-inflation","tag-interest-rates","tag-israel","tag-pmi","tag-strait-of-hormuz-supply-chain","tag-supplier-delivery-times-2026","tag-supply-chain","tag-us-pmi-july-2026"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/570929","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=570929"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/570929\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/570930"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=570929"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=570929"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=570929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}