ISM Report: Manufacturing slumps for second straight month

ISM index hovers just below 50 as uncertainty slows growth

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Economic activity in the manufacturing sector contracted in July for the second time since July 2009; however, the overall economy grew for the 38th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued Aug. 1 by Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. The PMI registered 49.8%, an increase of 0.1 percentage point from June's reading of 49.7%, indicating contraction in the manufacturing sector for the second consecutive month, following 34 consecutive months of expansion.

The New Orders Index registered 48%, an increase of 0.2 percentage point from June and indicating contraction in new orders for the second consecutive month, but at a slightly slower rate. Both the Production Index and the Employment Index remained in growth territory, registering 51.3% and 52%, respectively. The Prices Index for raw materials registered 39.5%, an increase of 2.5 percentage points from the June reading of 37%, indicating lower prices on average for the third consecutive month. “A growing number of comments from the panel this month reflect a slowdown in their businesses and general concern over increasing economic uncertainty,” Holcomb said.

Manufacturing contracted in July as the PMI registered 49.8%, an increase of 0.1 percentage point when compared to June's reading of 49.7%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI in excess of 42.6%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI indicates growth for the 38th consecutive month in the overall economy, but indicates contraction in the manufacturing sector for the second time since July 2009, when the PMI registered 49.2%. 

The last 12 months of PMI