Manufacturing Activity Slows Down For First Time In 3 Years
According to the ISM Manufacturing Report for July, economic activity in the manufacturing sector contracted in June for the first time since July 2009. The PMI score was at 49.7, down 3.8% from May. However, the overall economy did continue to grow for the 37th consecutive month, albeit at a slower pace. The new orders index contracted for the first time since April 2009 to a reading of 47.8. Production dropped 4.6% along with employment decreasing 0.3%; although both indexes still registered scores above 50 to signal growth. Inventories contracted at a faster rate in June, dropping 2% to an index of 44.
Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee, said “The Prices Index for raw materials decreased significantly for the second consecutive month, registering 37 percent, which is 10.5 percentage points lower than the 47.5 percent reported in May. Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China."
Backlogs of orders contracted for the 3rd consecutive month while exports dropped from growing, down to 47.5 in June from 53.5 in May. Imports registered no change, growing at the same rate as in May.
Seven of the 18 manufacturing industries reported growth in June, including Fabricated Metal Products, Machinery, and Primary Metals.
Source: Institute of Supply Management