Key US manufacturing index declines in July for 3rd straight month

02 August 2010 17:34  [Source: ICIS news]

WASHINGTON (ICIS)--A key measure of US manufacturing activity eased further in July, a national suppliers group said on Monday, another indication that the country’s economic recovery is slowing down.

The Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) declined slightly to 55.5% in July from the June reading of 56.2%.

While the PMI measure of 55.5% for June did indicate that US manufacturing activity was continuing to expand, it marked the third straight month of lower numbers.

The purchasing managers index is a composite of supplier responses to the institute’s monthly survey regarding 18 different production categories among 13 major industrial sectors.

A PMI reading above 50% means that the overall manufacturing sector is expanding, while a measure below that midpoint indicates that production is contracting.

The index began a slow and uneven recovery in the fourth quarter last year, rising from 52.4% in September 2009 to its most recent high point of 60.4% in April this year.

But the index edged down to 59.7% in May and 56.2% in June before slipping narrowly to July’s PMI of 55.5%.

“Manufacturing continued to grow during July, but at a slightly slower rate than in June,” said Norbert Ore, chairman of the institute’s survey committee.

He said the PMI was pulled down in July by sharper downturns in three key data subsets - new orders, order backlogs and production levels.

The new orders index fell to 53.5% in July from June’s reading of 58.5%, a decline of five percentage points, or 8%.

Production data fell from June’s measure of 61.4% to 57% in July, a drop of 4.4 percentage points, or 7%.

The index for order backlogs among manufacturers also declined in July to 54.5% from June’s measure of 57%, a more modest fall-off of 2.5 percentage points, or 4.4%.

Within the 13 key manufacturing industries surveyed by the institute, plastics and chemical products both reported growth in July.

But the underlying data were mixed, with the chemicals sector reporting declines in both new orders and production in July. The plastics and rubber sector, however, saw growth in both new orders and production last month.

The downturn in the purchasing managers index comes in the wake of several other economic indicators that point to a slowing pace of recovery.

Last week the Commerce Department reported that US sales of durable goods fell in June by 1% from May’s level.

In addition, US leading economic indicators have edged lower, retail sales are down, the housing sector remains near record lows, and Fed Chairman Ben Bernanke and the top White House economist have indicated that the recovery is wobbly.

To discuss issues facing the chemical industry go to ICIS connect
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly