ISM Shows Second Month of Contraction

We have another contraction from the Institute for Supply Management. The ISM reported that July’s manufacturing PMI came in at 49.8, versus a Bloomberg consensus target of 50.2 for the month. June’s report was 49.7, making this a second contraction under the 50.0 bar between growth and contraction.

Today’s report showed that new orders and inventories contracted, but production and employment grew for the month as supplier deliveries came in faster.

The commentary on each index noted:

The New Orders Index registered 48 percent, an increase of 0.2 percentage point from June and indicating contraction in new orders for the second consecutive month, but at a slightly slower rate. Both the Production Index and the Employment Index remained in growth territory, registering 51.3 percent and 52 percent, respectively. The Prices Index for raw materials registered 39.5 percent, an increase of 2.5 percentage points from the June reading of 37 percent, indicating lower prices on average for the third consecutive month.

Here is the crux of the report: A growing number of comments from the panel for the month of July reflect a slowdown in their businesses and also point to a general concern over increasing economic uncertainty.

JON C. OGG