Economic activity in the manufacturing sector contracted for the fifth consecutive month in July, according to a report from the Institute for Supply Management (ISM).
The monthly report, which reflects the health of the sector, offered a glimpse into how difficult recent years have been for manufacturing, a part of the economy President Donald Trump has championed during his second term in office. ISM found that the manufacturing sector contracted for 26 consecutive months before expanding in January and February of this year. Then, the sector began contracting again.
Susan Spence, the chair of ISM’s manufacturing business survey committee, said in the report that the Purchasing Manager’s Index (PMI), which is based on a survey of purchasing managers at manufacturing businesses, registered 48% in July, a slight decrease from June’s reading of 49% and a sign of contraction.
“In July, U.S. manufacturing activity contracted at a faster rate, with declines in the Supplier Deliveries and Employment Indexes contributing as the biggest factors in the 1 percentage-point loss of the Manufacturing PMI,” Spence said in the report.
ISM’s New Orders Index contracted for the sixth month in a row, following a three-month period of expansion. The Employment Index contracted as companies looked to manage their current workforce and not hire new employees. The Inventories Index contracted slightly, as companies worked to reduce and adjust inventory to better align with demand.
On a positive note, demand indicators improved, with the New Orders Index and Backlog of Orders Index contracting at slower rates than in June. The ISM’s Production Index increased month over month and moved further into expansion territory.
Despite the good news, none of the largest manufacturing industries in the U.S. expanded in July. Some of the contracting industries included wood products; fabricated metal products; computer and electronic products; transportation equipment; appliances and components; and food, beverage and tobacco products.
