U.S. manufacturing growth slowed for the third straight month in July as the sector's year-long recovery showed new signs of weakness, the Institute for Supply Management reported.
The PMI manufacturing index fell to 55.5 percent in July. down from 56.2 the month before and the lowest level since November 2009. New orders also slowed down sharply, dropping five percentage points from June to 53.5 percent, and inventories grew 4.4 percentage points to 50.2 percent, the first expansion in inventories in four months.
In a separate report, the Commerce Department said construction spending edged up 0.1 percent in June because of government contracts. Private sector activity in both housing and nonresidential projects fell.
By The Numbers: ISM Monthly U.S. Manufacturing Production Index.
The ISM report came as HSBC China Manufacturing Purchasing Managers’ Index fell to 49.4 last month from 50.4 in June – its first drop below 50 since March 2009, and the state-affiliated China Federation of Logistics and Purchasing said its manufacturing index fell to 51.2 in July from 52.1 in June.
The ISM index of U.S. manufacturing index peaked in April at 60.4 but is well above its 32.5 reading in December 2008, the low point in the recession. Economists say manufacturing has been boosted by restocking of inventories depleted during the recession.
Measures of production and new orders, which signal future business, both grew more slowly last month, the Institute for Supply Management said. But more manufacturers said they were willing to hire. ISM’s manufacturing employment index registered 58.6 in July, up from 57.8 in June.
"Manufacturing continued to grow during July, but at a slightly slower rate than in June,” said Norbert J. Ore, chairman of ISM’s Manufacturing Business Survey Committee. “Employment, supplier deliveries and inventories improved during the month and reduced the impact of a month-over-month deceleration in new orders and production.
ISM reported growth in 10 of the index’s 18 manufacturing industries. Sectors showing growth were plastics and rubber products, miscellaneous manufacturing, paper products, electrical equipment, appliances and components, transportation equipment, primary metals, textile mills, computer and electronic products, fabricated metals and chemicals. Showing contraction were nonmetallic mineral products, furniture and related products, food, beverage and tobacco products and machinery.
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