EmailThe ISM Manufacturing Index eked out a small gain in July, increasing from 49.7 in June to 49.8. That was not enough to end the contraction cycle. The Briefing.com consensus expected the ISM Index to increase to 50.1. The ongoing manufacturing contraction should not have been too surprising since nearly all of the regional manufacturing surveys showed decelerating production levels. The ISM production index managed to strengthen slightly, increasing from 51.0 in June to 51.3 in July.
The gain, however, came from the continuing paring down of backlogs (43.0 in July from 44.5 in June). Order backlogs have now contracted for four consecutive months. The contraction in new order levels slowed as the respective index increased from 47.8 to 48.0. With order backlogs contracting at an accelerated pace and new orders demand weak, the expansion in production for 38 consecutive months will likely end in August. The employment index weakened, falling from 56.6 in June to 52.0 in July. While the index does not have a direct effect on Friday’s employment numbers, the slowdown in employment numbers is not encouraging.
