The ISM (Institute for Supply Management) Manufacturing PMI registered 46.8% last month, indicating industry economic activity contracted at a faster rate when compared to June’s figure of 48.5%.
“After breaking a 16-month streak of contraction by expanding in March, the manufacturing sector has contracted the last four months,” says Timothy Fiore, chair of the ISM’s manufacturing business survey committee. “Of the five subindexes that directly factor into the Manufacturing PMI, only one (supplier deliveries) was in expansion territory, up from zero in June.”
The new orders index contracted for the fourth consecutive month, falling 1.9 points for a July reading of 47.4%. Anything lower than 50% represents contraction.
The production and employment indexes also contracted faster last month, registering 45.9% and 43.4%, respectively.
Five industries reported growth in July:
- Printing & related support activities
- Petroleum & coal products
- Miscellaneous manufacturing
- Furniture & related products
- Nonmetallic mineral products
All six of the largest manufacturing industries — machinery; transportation equipment; fabricated metal products; food, beverage & tobacco products; chemical products; and computer & electronic products — contracted in July,” says Fiore.
The comments of the survey emphasize lower sales and slow business conditions across sectors.
“Even though we are used to a seasonal reduction in business over the summer, consumer behavior is changing more than normal,” writes one executive in the food, beverage & tobacco products industry. “Sales are lighter, and customer orders are coming in under forecasts. It seems consumers are starting to pull back on spending.”
“Unfortunately, our business is experiencing the sharpest decline in order levels in a year. We were well below our budget target in June; as a result, it was the first month this year that we had negative net income,” writes another respondent in the fabricated metal products sector.
