US manufacturing sector clings to narrow growth

01 August 2008 16:59  [Source: ICIS news]

WASHINGTON (ICIS news)--The US manufacturing sector struggled to maintain a narrow rate of growth in June, according to industry data issued on Friday, with chemicals among production areas showing gains while plastics contracted.

 

The Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) for the nation’s manufacturing economy held more or less steady at 50% in July following a June index of 50.2%.

 

A PMI reading of 50% or higher indicates that manufacturing industries - key downstream consuming sectors for chemicals - are experiencing growth. A reading below 50% means that the broad manufacturing sector is contracting.

 

The 50.2% index measured in June marked an end to four consecutive months of contraction, and market watchers were keen to see if July would continue to show even modest growth.

 

However, while still in barely positive territory, the July PMI reading does not suggest a recovery, the institute indicated.

 

“In this month’s report, manufactures indicate no change in overall business activity when compared to June,” said Norbert Ore, head of the institute’s survey committee.

 

“This continues a trend biased toward relatively minor contraction established more than 12 months ago,” he said. “While the PMI indicates little to no change has occurred during this period, it would be hard to convince manufacturers who are faced with higher costs and uncertain demand that there is little change taking place.”

 

Even so, Ore noted that while July’s 50% index reading is mediocre at best, “Manufacturing has maintained a reasonable level of activity during a period in which other sectors of the economy have been in recession”.

 

Within its survey of 19 key industries, the institute said that chemicals were among six sectors showing growth in July, along with key downstream areas such as computers and electronics, food and beverages, metals and paper products.

 

Plastics and rubber manufacturers were in contraction in July, the institute said, along with wood products, transportation equipment, appliances and fabricated metal.

 

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By: Joe Kamalick
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