U.S. manufacturing growth slows in July

The ISM’s manufacturing purchasing managers index, which was released ahead of its normal 10am Eastern Time schedule, fell to 52.7 in July from 53.5 in June. A reading above 50 indicates general expansion, and the July PMI registered at 52.7 percent.

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

The Production Index was 56.0%, 2.0 percentage points above the June reading of 54.0%.

Inventories of raw materials were 49.5%, a decrease of 3.5 percentage points from the June reading of 53.0%. Ten of the manufacturing industries reported growth in employment, while eight industries – Petroleum and Coal Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; and Chemical Products – reported decreases in employment. A Federal Reserve report last month showed manufacturing output was flat in June for the second straight month, restrained by a decline in auto production.

TICKING UP: Economists expect the index registered a slight increase – to 56.2 in July from 56 in June, according to a survey by the research firm FactSet.

The July data is disappointing relative to the strong reading in June, but 52.7 is higher than the YTD average coming into the month.

Demand appears to be largely domestic. “However, activity in other, larger parts of the economy has remained strong.”.

According to Amy Brownbill, Economist at Markit, the latest survey data indicated worsening operating conditions at Malaysian manufacturers. The employment component, which has been softening recently, will likely be more closely scrutinized in front of Friday’s all-important jobs report.

“There’s an abundance of containerboard in the global markets”. Consumer spending is estimated to account for about two-thirds of U.S. economic activity. This is just slightly better than last month’s reading of 53.5.

US factories were a little less busy last month.