Manufacturing growth slows in July

A key report on U.S. manufacturing was released earlier than scheduled and immediately raised some doubt about the strength of the economy in the final half of the year. The Institute for Supply Management, a trade group of purchasing managers, issues its index of manufacturing activity for July on Monday, August 3, 2015.

The Commerce Department reported last Monday that orders to U.S. factories for big-ticket goods rose sharply in June, though the gain was driven by a surge in demand for commercial aircraft – a volatile category.

The index had risen in May and June before slipping last month.

The ISM purchasing managers index on the manufacturing sector fell to 52.7 in July from 53.5 in June.

The decrease by the headline index partly reflected a slowdown in the pace of job growth in the manufacturing sector, with the employment index falling to 52.5 in July from 55.5 in June.

On the other hand, the report said the new orders index inched up to 56.5 in July from 56.0 in June.

“While this is well below the low 60s new orders printed through the end of 2014, it is still a solid pickup from Q1 lows and a level consistent with accelerating growth”, said Jeremy Schwartz, a global strategy and economics associate at Credit Suisse. The production index also climbed to 56.0 from 54.0.

Demand appears to be largely domestic.

The employment component is interesting considering that the US employment report will be released on Friday.