ISM Manufacturing Index Falls to 52.7 in July

By Jeffrey Sparshott 

        U.S. manufacturers expanded at a slower pace in July, according to a survey released Monday by the Institute for Supply Management. Employment also increased at a slower pace last month.
        The ISM's manufacturing purchasing managers index, which was released ahead of its normal 10 a.m. Eastern Time schedule, fell to 52.7 in July from 53.5 in June. Economists surveyed by The Wall Street Journal had expected the June PMI to hold steady at 53.5.
        A reading above 50 indicates that the manufacturing economy is generally expanding.
        "Overall, we view the details of the July ISM as a bit more positive than the headline index would suggest, but expect domestic manufacturing to remain sluggish" in the third quarter, Barclays economist Jesse Hurwitz said in a note to clients.
        U.S. factory activity has been lackluster in recent months. 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.
        In one positive sign, the ISM new orders index increased to 56.5 last month from 56 in June. The new orders component of the index, now up for four straight months, is often viewed as a leading indicator of activity.
        "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 ISM production index climbed to 56 from 54.
        Demand appears to be largely domestic. The exports index dropped to 48 from 49.5, a possible reflection of soft global growth and a strong dollar.
        The employment index decreased to 52.7 in July from 55.5 in June. That may coincide with softer payroll gains for the month.
        The Labor Department will release the July employment report Friday. Economists surveyed by The Wall Street Journal think the U.S. economy added about 215,000 jobs last month, down from 223,000 the prior month.
        Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com
        (END) Dow Jones Newswires

        August 03, 2015 10:51 ET (14:51 GMT)

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