EmailManufacturing activities slowed in July as the ISM Manufacturing Index fell from 55.3 in June to 50.9 in July. The Briefing.com consensus expected the index to decline to 54.0.
The pullback in the ISM level confirmed the weaknesses seen in the Federal Reserve regional manufacturing surveys. Three out of five regions -- New York; Dallas; and Richmond -- revealed outright contractions in July while the other two regions -- Philadelphia and Kansas City -- barely held their ground above the expansion/contraction threshold.
The ISM report is pointing toward a quickening deceleration and a potential contraction in production. Both new orders (49.2 from 51.6) and backlogs (45.0 from 49.0) contracted in July. Without a turnaround in either of these categories, production will most likely drop from its current 52.3 to below 50.0 for the first time in over two years.
The employment index fell from 59.9 in June to 53.5 in July. While this still represents growth in manufacturing payrolls, the marked deceleration in the index does not bode well for stronger-than-expected employment numbers.
